In a keynote address at the Boao Forum for Asia (BFA) in China’s southern island province of Hainan on Tuesday, Chinese President Xi Jinping pledged to open up his country’s economy further.
Speaking to Chinese and foreign businesspeople at the annual meeting of the forum, often dubbed the “Asian Davos” as it is modeled after the World Economic Forum (WEF) held annually in Davos, Switzerland, Xi also presented China – and perhaps himself – as a staunch defender of international order and rules and an ardent advocator of free trade and globalization.
Xinhua, the highly censored country’s official news agency, said his “speech wins high appreciation from world leaders at Boao,” while China Daily, another key state media outlet, headlined “Xi’s words win praise from [US President Donald] Trump and others.”
In many ways, such a positive reaction is understandable. In both tone and content, the highly anticipated remarks have eased widespread concerns about a potential trade war between China and the US, which is why markets reacted well after his speech.
During the past few weeks, the two countries announced tit-for-tat tariff plans against each other. On April 3, the White House released a list of Chinese products, worth US$50 billion, it proposed to hit with tariffs of 25%. Just a day later, the Chinese government unveiled its own list of US imports – also worth $50 billion – that would be subject to levies.
Soon after Trump threatened tariffs on an additional $100 billion on their imports on April 5, Chinese officials immediately hit back, stating they “are definitely not afraid of a trade war” and vowing “to resolutely safeguard [their] interests … at whatever cost.”
This tit-for-tat exchange sparked apprehensions among many about an all-out trade war between the world’s two superpowers.
But in his first public remarks since the trade conflict escalated, Xi was relatively conciliatory – or at least, less inflammatory than his officials and state media.
Among other things, Xi promised to ease restriction on foreign investment and ownership in the financial and automotive industries, to lower high tariffs on imported cars, and to improve protection for intellectual property.
Whether such measures are part of China’s ongoing reform and opening-up plan or concessions aimed at defusing the looming trade war is an open question. What’s clear is that they have consistently been raised by the White House along with American and international business leaders.
In fact, these three issues, notably China’s alleged abuses of intellectual property rights, are some of the fundamental reasons behind the Trump administration’s current trade disputes with China. That’s why Trump was receptive to Xi’s speech, expressing his gratitude for the Chinese leader for his “kind words on tariffs and automobile barriers” and “his enlightenment on intellectual property and technology transfers.”
Against this background, Xi’s Boao statement was a welcome move, as it has significantly de-escalated – at least for now – the trade conflict between the world’s two biggest economies.
Nonetheless, much of what Xi promised on Tuesday had been made in his previous key statements, notably in his addresses at the WEF in Davos in January 2017 and the Asia-Pacific Cooperation (APEC) Summit in Da Nang, Vietnam, 10 months later.
His Davos speech, which was the first such by a Chinese leader and took place just three days before Trump’s swearing-in as the US president, likened protectionism to “locking oneself in a dark room” that blocks “light and air” and presented the Communist-run country as the new champion of free trade, open economy and globalization.
Xi then promised that “China will keep its door wide open … expand market access for foreign investors … strengthen protection of property rights, and level the playing field to make China’s market more transparent and better regulated.”
In the APEC remarks, after orating, “Openness brings progress, while self-seclusion leaves one behind,” he vowed that the 1.3-billion-people country “will not slow its steps in opening up itself,” pledging to open the service sector further, “and protect the legitimate rights and interests of foreign investors.”
On this reading, it is apt to see Xi’s Boao speech as more a restatement of existing commitments than any major new initiatives and, thereby, not to be overoptimistic about it.
Rhetoric vs reality
After his Davos speech, it was argued that while Xi’s commitments to open up the world’s second-biggest economy was heartening, as it came at a time when the world was concerned about Trump’s protectionist policies, much of his pronouncements remained rhetoric. This remains true today.
When speaking to political and business leaders from the Asia-Pacific region last November, Xi also quoted “an old Chinese saying,” stating “a commitment, once made, should be delivered.”
In announcing China’s opening-up and reform measures at the BFA this week, he likewise vowed: “We will ensure that these measures are materialized.” A commentary about Xi’s speech published by Xinhua on April 11 equally asserted, “As always, China will match its words with deeds.”
But had China implemented all – or most of – what Xi pledged in Davos in January 2017, the two superpowers and the world at large would probably not be facing a potential catastrophic trade war today.
The Trump White House’s “America first” trade policy has, without doubt, contributed to the current trade tensions. But China’s long-held unfair – and, for many, illicit – trade practices – including its intellectual property theft – are also blamed for these disputes.
As noted here and elsewhere, for all Trump’s posturing and Xi’s rhetoric, when it comes to free trade, open economy and globalization, Trump’s America is still more open than Xi’s one-party China and state-dominated economy.
An op-ed in the People’s Daily on Wednesday vehemently rejected the view that Xi had blinked first in his country’s trade-war standoff with Trump’s America. Instead, it plainly stressed, China “will open even wider to the world, but it will do so in accordance with its own interests,” adding that the Asian giant “will never open at the expense of its own interests.”
Such a comment by China’s top newspaper indicates that for all Xi’s rhetoric about win-win cooperation or pledges to build “a community with a shared future for mankind,” all Beijing does is for China’s own interests and it always puts China first. This could be another reason it may be wise for foreign investors and countries not to expect too much from Beijing.