China's Xi renews pledges to open economy, cut tariffs this year

China's Xi renews pledges to open economy, cut tariffs this year

China's Xi renews pledges to open economy, cut tariffs this year

Xi said that China will sharply widen market access for foreign investors, a chief complaint of the country's trading partners and a point of contention for U.S. President Donald Trump's administration, which has threatened billions of dollars in tariffs on Chinese goods.

"In today's world, the trend of peace and cooperation is moving forward and a Cold War mentality and zero-sum game thinking are outdated", Xi said at the opening of the Boao Forum for Asia.

"He said "lower" auto import tariffs, which is the opposite of the trend in recent weeks from both the U.S. and China in "raising" tariffs".

Mr Trump's move last week to threaten China with tariffs on $50 billion in Chinese goods was aimed at forcing Beijing to address what Washington says is deeply entrenched theft of U.S. intellectual property and forced technology transfers from United States companies. Beijing responded with its own 50 billion dollar list of U.S. goods for possible retaliation.

He also promised to encourage "normal technological exchange" and to "protect the lawful ownership rights of foreign enterprises".

Trump asks, "Does that sound like free or fair trade".

Analysts have cautioned that any Chinese concessions on autos, while welcome, would be a relatively easy win for China to offer the United States, as plans for opening that sector had been under way well before Trump took office.

As seen in the chart below from Westpac Bank, China's trade surplus with the United States has ballooned over the past decade as exports to the USA grew substantially faster than imports heading in the other direction.

Xi gave no details on how those conditions might change, leaving it unclear whether that might mollify Washington.

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Trump complained as recently as Monday about China's 25% tariff on foreign cars, pointing out that it's far higher than the 2.5% tariff the United States charges for imported cars.

Chinese officials deny foreign companies are compelled to hand over technology, but business groups say joint venture and licensing rules make that unavoidable. And he said that although the US hoped to avoid taking action, Trump "was not bluffing".

They now are limited to a 50% stake in joint ventures, and are not allowed to establish wholly owned factories. -China Business Council, an industry group, welcomed Xi's announcement but expressed hope for additional steps such as ending requirements for joint ventures and technology licensing.

The biggest beneficiaries of a cut in China's 25 percent tariff on most auto imports will be the handful of automakers such as electric vehicle brand Tesla that have no factory in China.

"It goes back to the fact that there is still uncertainty on trade wars and even if we get a slight indication that it won't be the worst case scenario, the market reacts positively", he said, while predicting ongoing trade tensions throughout 2018.

More broadly, Xi repeated official promises to expand imports and to narrow China's trade surplus, which reached $423 billion past year - about two-thirds of that with the United States. "We have a genuine desire to increase imports and achieve a greater balance of global payments".

Xi tried to defuse concern about Beijing's growing military might and territorial disputes with its neighbors, saying his government wants to pursue peaceful, cooperative development.

"We will not bully our neighbors", the president said. "Arrogance or self-righteousness can only bump into walls at every turn". And why is Trump targeting China? Rather than waiting weeks for the USA tariffs to be implemented, Trump backed a plan by Robert Lighthizer, his trade representative, to seek the enhanced tariffs.

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