Taking center stage amid frictions between the world’s two largest economies, the Boao Forum for Asia (BFA) this year became a platform for conveying the Chinese viewpoint to the world.
In the past the forum has promoted economic cooperation within Asia as well as between Asia with the rest of the world. It has often been a venue for economic debate and dialogue for leaders, experts and businesspeople alike. Having grown in prominence and significance considerably since the Belt and Road Initiative (BRI) and the Asian Infrastructure Investment Bank took off, the gathering in China’s Hainan province this year was well attended, with representatives from 29 countries and top international financial institutions.
What made it a landmark event was the Chinese president’s keynote speech, which carried potential to turn the tide of an imminent trade war. Focusing on reform, innovation and “opening up” while showcasing China’s rise and rejuvenation, he categorically rejected the option of trade confrontation even though a tit-for-tat response was expected from him under the current circumstances. The key points of his speech sounded more like a diplomatic ice-breaker.
Announcing a new direction, President Xi Jinping said that countries should “stay committed to openness, connectivity and mutual benefits, build an open global economy, and reinforce cooperation within the G-20, APEC and other multilateral frameworks. We should promote trade and investment liberalization and facilitation, and support the multilateral trading system.”
Going on to urge “dialogue rather than confrontation” while putting forward alternate possibilities, Xi was very positive about a “new phase of opening up” to facilitate foreign businesses, reduce import tariffs and create a liberal environment for investment by “significantly broadening” market access.
Not only that, trying to dispel negative perceptions about the BRI mega-project, the Chinese president stressed that it would benefit the entire world and dismissed the possibility of any power ambitions. “China has no geopolitical calculations, seeks no exclusionary blocs and imposes no business deals on others,” he said.
Xi’s olive branch
Quite significant in the prevailing scenario, it seems an olive branch has been offered to reverse dangers of a trade war. In stark contrast to US President Donald Trump’s recent measures aimed at restricting trade with China, Xi made an effort to remove hurdles and took the pacifist option instead.
Virtually having thrown the ball into America’s court with economic diplomacy, the peace pipe was offered instead at the BFA in the presence of leaders from other countries such as Pakistan, Philippines and Singapore, as well as Christine Lagarde from the International Monetary Fund.
Addressing the forum, Pakistani Prime Minister Shahid Khaqan Abbasi said, “As nations look inward, and turn their backs on globalization, we in Asia confront a strategic choice: whether to follow suit, or to script an alternative, more hopeful vision for our future.”
Avoiding escalation in trade disputes was considered the better option by other leaders also, some of whom voiced support for free trade and globalization with enhanced interconnectivity.
According to most experts at the forum, falling into protectionism would ultimately damage both global and Asian economies, which represent nearly 40% of the world economy and contribute about one-third to global economic growth.
Notably, the announcement regarding the lowering of tariffs on imported automobiles in reply to Trump’s tweets of the previous day in which he had complained about China’s tax on imported automobiles could serve to lower the temperature, as this could provide incentive to foreign carmakers to open factories in China.
Assessing the main impact of the BFA, Iris Pang from the ING Bank in the Netherlands observed, “China has already given the US the chance to step backwards, and go back to Square 1.”
Thus the narrative at the Boao Forum conveyed the right signals to turn handicaps into opportunities, but practical steps will be needed as well to yield solid results. In the past also, China has taken positive steps to fill the void wherever the US pulls back, and these announcements by President Xi reminded many of the Davos Economic Forum, where China led the discussion on climate change, taking the lead as US support for the cause tapered off.
Talking to Bloomberg TV about the Boao Forum, Barclays deputy chairman Gerry Grimstone was very optimistic about the proceedings and called China a “beacon of stability.” He further said that China was “wonderful” for UK business as it was helping to stabilize “a very troubled world.”
Apparently, the impact of the four-day forum that ended on Wednesday has been quite upbeat, but it remains to be seen whether the effort is effective in calming troubled waters.