President Xi Jinping blinks, and Trump wins.
In an attempt to stave off a trade war that could cripple China’s economy, Chinese President Xi promised to cut China’s auto tariffs and improve intellectual property protection in possible concessions aimed at defusing a worsening dispute with Washington over trade and technology that investors worry could set back the global economic recovery.
Speaking at a business conference, Xi made no direct mention of President Donald Trump, or the dispute. He promised progress on areas that are U.S. priorities including opening China’s banking industry and boosting imports but didn’t address key irritants for Washington such as a requirement for foreign companies to work through joint ventures that require them to give technology to potential local competitors.
Private sector analysts saw Xi’s speech as an overture to help end the biggest trade dispute since World War II. It has fueled fears of a global economic chill if other nations respond with their own import barriers, reports USA Today.
More broadly, Xi repeated official promises to expand imports and to narrow China’s trade surplus, another irritant for Washington. China reported a global trade surplus of $423 billion last year – about two-thirds of that with the United States.
“China does not seek a trade surplus,” said Xi to an audience of Chinese and foreign businesspeople. “We have a genuine desire to increase imports and achieve a greater balance of international payments.”
Markets surged in response in Asia, Europe and also in the U.S., where the Dow jumped 300 points before the opening bell Tuesday.
Xi tried to position China as a defender of free trade and cooperation, despite its status as the most-closed major economy, in response to Trump’s “America first” calls for import restrictions and trade deals that are more favorable to the United States.
“China’s door of opening up will not be closed and will only open wider,” said Xi at the Boao Forum for Asia on the southern island of Hainan.
Xi said Beijing will “significantly lower” tariffs on auto imports this year and ease restrictions on foreign ownership in the auto industry “as soon as possible.”
Trump has threatened to raise tariffs on Chinese goods worth $50 billion in response to complaints Beijing pressures foreign companies to hand over technology in violation of its World Trade Organization market-opening commitments. Beijing fired back with its own $50 billion list of U.S. goods for possible retaliation.
The Chinese leader promised to encourage “normal technological exchange” and to “protect the lawful ownership rights of foreign enterprises.”
“President Xi’s speech could create a very good platform to launch U.S.-China dialogue at the WTO to find a deal on intellectual property rights,” said economist Rajiv Biswas of IHS Markit in a report. “This would be a victory for the world trading system and an important step away from the abyss of rising global protectionism.”
The dispute is likely to end “with a concession from China,” said Larry Hu of Macquarie Group in a report.
Singapore Prime Minister Lee Hsien Loong, speaking at the Boao event, welcomed Xi’s promises on finance, investment, intellectual property and auto imports.
“We look forward to seeing these strategies elaborated, implemented and bearing fruit,” said Lee, according to a transcript issued by his office.
Also Tuesday, China filed a WTO challenge against Trump’s earlier tariff hike on steel and aluminum in a separate dispute.
Mr Americana, Overpasses News Desk
April 10th, 2018