Xi takes aim at Trump (and doesn’t even drop his name)

Without naming the president, or the country, President Xi Jinping took aim at his US counterpart's "America first" agenda in a major speech on Tuesday.

Xi said a “Cold War mentality” of “zero-sum games” was increasingly out of date, trying to present China as a force for global good in his keynote address at the Boao Forum on the southern Chinese island of Hainan.

“No matter how developed China is, we will not threaten anyone, overthrow the existing international system, or seek to build our sphere of influence,” Xi said, in his first public speech after securing constitutional changes that allow him to stay on as president indefinitely.

Trade and tariffs

Boao is known as Asia’s answer to the World Economic Forum in Davos.

On trade, Xi said that China is not seeking a surplus – exporting more goods than importing it – in an apparent response to Trump’s objection to his country’s trade deficit with China.

He objected to threats of new US tariffs against China's products, again without naming the country.

“We hope that developed countries will stop setting artificial barriers to regular, reasonable trade of high-tech products, and relax the limits of exporting high-tech products to China,” said Xi. 

In late March, the Trump administration proposed the first tariffs specifically targeting China. Citing intellectual property theft, the US said it would impose a 25% levy on $50 billion worth of Chinese high-tech products, such as semiconductors and robots. 

China fired back by proposing similar levies on $50 billion worth of US exports. Last Thursday, Trump threatened to slap additional tariffs on $100 billion more Chinese imports. 

Opening up

Pledging to open up China’s market further, Xi announced a series of measures intended to make it easier for foreign investors and firms to do business in the country. 

Xi said that China would lower automobile import duties this year, in an apparent response to Trump’s recent criticism of China's unfair trade practices.

When a car is sent to the United States from China, there is a Tariff to be paid of 2 1/2%. When a car is sent to China from the United States, there is a Tariff to be paid of 25%. Does that sound like free or fair trade. No, it sounds like STUPID TRADE - going on for years!

— Donald J. Trump (@realDonaldTrump) April 9, 2018

Rules relating to foreign ownership of the automobile industry will also be relaxed, Xi said, although he didn't offer a timetable. 

Xi also vowed to open up the services industry – the financial industry in particular – lift some restrictions on foreign investment, better protect intellectual property and lower import duties for other products.

Experts said that Trump would likely take credit for China’s new measures, but they argue that these measures were introduced in China’s interest, not America’s. 

Zhang Yifan, who teaches economics at the Chinese University of Hong Kong, told Inkstone that the Chinese government had been working on new policies “long before” the trade dispute with the US.

For example, Beijing decided to raise caps on foreign equity in China’s financial sector last November, he said.

“It is in China’s own interest to further open up the economy. Many foreign firms are leaving China. Finding a way to retain them and attracting new foreign firms are important tasks for the government.”

Opening up, really? 

China has vowed to open its economy and allow better market access before, and hasn’t always delivered, analysts said.

“I don’t think there is much new in Xi’s speech,” said William Hurst, an associate professor of political science at Northwestern University. 

“The Chinese authorities have trailed their planned liberalization in the financial and automotive sectors for some time now,” said Duncan Innes-Ker, regional director for Asia of the Economist Intelligence Unit. Xi’s commitments, he said, remained “quite vague.”

But if Xi follows through on his plans, then next year’s Boao could see a very different China in the spotlight.