Xi pledges to open up economy amid trade tension

China’s president, Xi Jinping, has stressed four areas of work to further open up the Chinese economy, in remarks that may be pitched at easing trade tensions with the US.

China will launch “a number of landmark measures” this year to significantly broaden its market access, improve the investment environment for foreign investors, strengthen legal protections for intellectual property and expand imports, Xi said in his opening remarks at the Boao Forum for Asia today (April 10).

“I need to tell everyone clearly: China’s door will not be closed; it will only open up wider and wider,” Xi stressed, adding the proposed measures will be implemented quickly.

The Boao Forum, which is held in the country’s southern tropical island province of Hainan, is known as China’s version of the World Economic Forum at Davos – an occasion when important announcements on policy and reform are often expected.

Xi’s speech, however, disappointed some China watchers.

“There was little in Xi’s speech that we haven’t heard before and nothing that would address broader US concerns over China’s trade practices,” Julian Evans-Pritchard, senior China economist at Capital Economics, writes in a note.

In terms of market access, Xi said China will ensure the implementation of a policy to lift the cap of the foreign equity stakes in banking, securities and insurance industries – a move originally announced in November 2017 as a means of spurring competition.

Foreign investors will be allowed to hold up to 51% of shares, up from the current limit of 49%, in “joint ventures in securities, funds or futures companies” over the next three years. The restrictions on investment in Chinese banks and financial asset-management companies will also be removed.

In the past, China relied mainly on favourable policies to attract foreign investors, but now we will have to rely more on improving our investment environment

Xi Jinping, People’s Republic of China

BlackRock chief executive officer Larry Fink said previously that China is one of the firm’s “most critical priorities” now that foreign ownership limits have been lifted, according to the FT. Other foreign financial firms, including JP Morgan, Morgan Stanley and UBS, welcomed the move.

“In the past, China relied mainly on favourable policies to attract foreign investors, but now we will have to rely more on improving our investment environment,” Xi added today.

China will step up the opening of the insurance industry, ease rules on foreign financial institutions looking to operate in China, and seek greater co-operation between Chinese and foreign financial markets, according to state media Xinhua.

Trade tensions

Apart from the pledge of opening up the Chinese economy, Xi made his first public address on trade liberalisation after the escalation of trade tensions with the US.

“China does not seek trade surplus. We have a genuine desire to increase imports and achieve greater balance of international payments under the current account,” he said.

Xi said China will “significantly” lower the import tariffs for auto this year – a day after US president Donald Trump complained on Twitter, calling the imbalance of car tariffs between the US and China a “stupid trade”.

Xi called on developed countries to end restrictions on exports from China, without making direct reference to particular countries: “We hope developed countries will stop imposing restrictions on normal and reasonable trade of hi-tech products, and relax export controls on such trade with China.”

“The Cold War mentality and zero-sum game are out of place,” he said. “Only by adhering to peaceful development and working together can we achieve true win-win results,” he added.

Role for Zhou

Founded in 2001, the Boao Forum is an annual conference in Hainan province, attended by more than 1,500 official delegates.

This year’s event runs from April 8-11. The former United Nations secretary general, Ban Ki-moon, and former head of the People’s Bank of China, Zhou Xiaochuan, were elected chairman and vice-chairman of the forum on April 9.

Despite Xi’s cautious speech, the forum has seen the launch of some notable initiatives. In 2014, premier Li Keqiang unveiled Shanghai and Hong Kong Stock Connect at the opening ceremony. One year later, Xi Jinping announced his massive Belt and Road building programme at the event.