Flanked by two giant television screens and bathed in a sea of blue light, President Xi Jinping chose his words carefully. But at the end of his speech at the Boao Forum on the idyllic island of Hainan, there was no doubt who they were aimed at.
Amid the promises and anti “Cold War” rhetoric, there was one overriding theme that Xi weaved through his keynote address to a packed audience of global leaders.
Slicing through the jargon, it was that China was a safe and reliable partner while the United States was not.
Making his first public speech since the escalating tit-for-tat trade dispute with the US, he talked about further opening up the world’s second-largest economy at what has become known as Asia’s Davos.
“China’s door of opening up will not be closed,” he said in the stunning southern China resort on Tuesday. “Human society is facing a major choice to open or close, to go forward or backwards.
“In today’s world, the trend of peace and cooperation is moving forward and a Cold War mentality and zero-sum game thinking is outdated,” he told the forum. “We must [always] refrain from seeking dominance [by rejecting] power politics.”
Planned tariffs
Obviously, the last reference was directed at US President Donald Trump. During the past two months, he has targeted Chinese imports and announced planned tariffs amounting to US$50 billion amid concerns about a spiraling trade deficit and intellectual property rights issues.
Last week, Beijing hit back with similar proposed duties on an array of US products and vowed to stand its ground in a row that threatens to spill over into the broader global economy.
Against this backdrop, Xi talked about “respect” and “dialogue” to solve problems and the dangers of building “barriers” when it comes to trade across the planet.
“We need to treat each other with respect and as equals, respect each others’ core interest and major concerns, and follow a new approach to state-to-state relations featuring dialogue,” he said. “We live in a time with an overwhelming trend towards openness and connectivity.
“[We must] stay as determined as ever to build world peace, contribute to global prosperity and uphold the international order,” he added.
But within the broad brushstrokes, there were layers of substance and promises.
Xi pledged to lower imported car tariffs this year, and open up further the financial and insurance industries, which indirectly address complaints by Washington in the simmering trade spat.
“China does not seek a trade surplus. We have a genuine desire to increase imports and achieve a greater balance of international payments under the current account,” he said, according to a translation of the speech reported by the state-owned news agency Xinhua.
“[We will] quickly relax restrictions on foreign shareholding, especially the restrictions on foreign investment in the automobile industry. And we hope developed countries will stop imposing restrictions on normal and reasonable trade of high-tech products, and relax export controls on such trade with China,” he added.
Apart from “significantly” lowering import tariffs for cars and other products, Xi also guaranteed a crackdown on intellectual property rights infringements.
This has become a crucial issue and not just in the White House. Global companies feel they have been cajoled into handing over detailed tech specs, or IPR, before they can get a business foothold in the country.
“[In 2018,] we will reorganize the State Intellectual Property Office to strengthen law enforcement,” Xi told the forum.
Foreign-funded enterprises
“We encourage Chinese and foreign companies to carry out normal technical exchanges and cooperation to protect the legitimate intellectual property rights of foreign-funded enterprises in China,” he added.
Still, most of these promises have been made before after a succession of working papers, which are probably gathering dust in an anonymous gray government building in Beijing.
Last year, the European Union Chamber of Commerce in China spelt out its frustration with Xi’s administration with two, succinct words: “promise fatigue.”
Indeed, what actual concrete steps are taken after this speech will be closely followed by the movers and shakers in the audience, including Christine Lagarde, the managing director of the International Monetary Fund.
“I read much of that speech as being about cementing China’s regional leadership as an open country fostering free trade and development,” Jim McCaughan, the CEO at Principal Global Investors, a global leader in institutional asset-management, told Bloomberg Television. “The idea that there is going to be a quick fix on this is unlikely.”
Sounds like another dose of “promise fatigue.”
Read: Fallout from US-China trade war would hit major global firms
The many people enthusiastic about China’s bright future should not forget the country faces several huge challenges. It was recently announced that President Xi Jinping picked PBOC deputy governor Yi Gang to run China’s central bank. Yi has a formable task before him as he shapes a response to the three or more rate hikes expected from America’s Federal Reserve while moving forward on Xi’s financial cleanup and deleveraging campaign.
This will have to be done at the same time China attempts to make huge loans funding One Bely One Road, keep inflation from rising and at the same time resolve trade issues with President Trump. The article below explores some of these problems.
http://brucewilds.blogspot.com/2018/04/china-warned-of-risk-from-loaning-to.html
As President Xi JinPing rightly pointed out USA must stop trying to dominate other countries and must stop acting in an arrogant manner. Such foolish behaviour will get USA nowhere. On the contrary, it will lead to the destruction of USA.
Shane Tarr Good luck with your investments. China has more debt per GDP and no one really knows how much debt there is in the shadow banking part of the Chinese economy. China is a country which is challenging every major power on Earth, and all at the same time. Napoleon and Hitler both tried that. It did not work out so well for them.
China has been promising to crack down intellectual property theft ever since 1978. This is 2018, forty years later and the same empty promises. China’s free ride is over.
Unfair….one needs to have a historical perspective on the rape and plunder of not just North America but also Western Europe and Japan. That to one side where is the biggest market for US motor vehicles outside of the US? Is it not China? Trump is over-extending himself intellectually if he thinks the US can win this trade war it has initiated. And who will lose even more is those "born in the USA".I don’t think a considerable number of Americans understand that no longer do all roads lead to the "American El Darado". And that is a great thing!
Wood Wu
In the current USD monetary system, liquidity is backed by debt, thus unsustainable, supported/maintained by US military, thus un-natural, and used by the US as a tool for global control, therefore unfair. Change will come, timing unsure, but very likely in our lifetime, the ensuing decade maybe.
There are many areas where China is unfair in its trade policies. A gross example is automobiles where China has a tariff of 25% vs ours of 2.5%. All this high level high falutin talk is just politispeak. Not real…
fdsfdsfds
Wood Wu Am a risk taker but having lived in the region for over 40 years and having worked with BW institutions I guess I knoe a thing or two. Also, being a trained historian of comparative economic history and social anthropology I tend to have a more nuanced view of how the world works or does not work. And I think I am backing the right horse. Essentially the West was "won" and now it is "losing" itself. Should we be upset? I for won’t be but I recognize there are others that do not see things the way I do. There is a modicum of "liberalism" left in thr wotld I can see.
The American business community have played the wrong hand with Pacific Rim Asia after World War Two and after 1978 when China woke up from the foolish path of Mao. The horse has left the barn and will never come home———the question we should be asking now is?———-when will our foolish leaders admit the BLUNDERS of the past 60 years and chart a new future that is not built on ILLUSION but on REALITY!!
A very well thought out crafted speech to the audience and to Western World leaders———all beautiful creamy FLUFF that everyone ate up. When you are winning bow your head BUT keep it humble and that is what President Xi did last night. Whether he means what he said?——–that depends on all the Global moving parts in the future!!
Most likely Xi wanted the US to give China a freehand to China’s expansionism in the Asia Pacific reqion.
Shane Tarr……There is something I could not understand. China benefitted tremondously under the Breton Wood’s architecture, China should uphold it. Why China is upending it? I think you might be putting your money on the wrong architecture.
Seriously is the IMF a real "mover-and-shaker" in the world of today? Given that China is in the process of upending the Bretton Wood’s architecture – and that includes the World Bank – just what role have Western to read US and European institutions got to play in the 21st Century. As both an investor and a "gambler" I am putting my $$$$$$$ on China not the Empires of the past 200 years.