Xi’s Belt and Road speech offers hints on US trade deal

Ko Tin-yau April 30, 2019 12:16

US President Donald Trump said last week that his Chinese counterpart Xi Jinping will be coming to the White House soon, fueling talk that the two sides may wrap up a long-awaited trade deal.

Meanwhile in Beijing, Xi hosted leaders from over 30 nations at the Belt and Road forum. In a 50-minute speech at the event, Xi talked about China’s plan to further open up its markets, increase imports, reduce tariffs, and improve intellectual property protection, among other reforms. The way I see it, Xi is basically giving away some of the details of the upcoming US-China trade deal.

Here are some key takeaways from Xi's speech:

Xi pledged to push all-around opening-up in modern services, manufacturing and agriculture sectors and allow foreign investors to own majority stakes, or in some cases, even 100 percent in China ventures.

The nation will launch a number of free-trade experimental zones.

China will ensure strict enforcement of Foreign Investment Law. It will push supply-side structural reform in an open and fair manner, and eliminate obsolete and excessive capacity.

Without innovation, there will be no improvement. China will step up efforts in enhancing intellectual property protection. That will not only meet a key demand of domestic and foreign corporates, it will also be in line with the nation’s strategy to seek high-quality, innovation-driven growth.

China will create a business environment that respects intellectual property, and improve the legal system to safeguard the rights. The nation will prohibit forced technology transfer and improve business secrets protection.

China has the world’s largest and fastest growing middle-class, which means vast consumption growth potential. Authorities will further reduce tariff and remove non-tariff barriers, in order to offer more choices and benefits for Chinese consumers.

China won’t deliberately seek trade surplus, and is willing to import more good quality farm produce, processed products and services from other countries. That would help achieve a more balanced trade.

Xi also vowed that China won’t devalue its currency to seek benefits for itself at the expense of its neighbors. Instead, it will keep the exchange rate of yuan at equilibrium.

The president stressed that China always value promises. Therefore, it will strictly implement multi- and bilateral trade agreements with various nations.

China will get rid of unreasonable rules, subsidies and practices that hamper fair competition and distort market, and treat all companies and business operators fairly.

Xi’s remarks were aimed at three groups of people.

The first group includes White House officials, US media and the public, who are told that China will keep its promises.

Xi also wants to send a message to Chinese citizens that the US-China trade deal should not be seen as a caving-in by Beijing. Instead, it’s a choice made by Beijing to further deepen its reform.

Finally, he is trying to address international criticism about the Belt and Road initiative and share China’s opening-up plans with other leaders.

This article appeared in the Hong Kong Economic Journal on April 29

Translation by Julie Zhu

[Chinese version 中文版]

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RC

Ko Tin-yau

Hong Kong Economic Journal columnist