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China's Xi Set for Landmark Economic Speech as Trump Trade Fight Simmers

China's Xi Set for Landmark Economic Speech as Trump Trade Fight Simmers
(Dollar Photo Club)

Monday, 09 April 2018 01:06 PM

All eyes are on Chinese President Xi Jinping to see if he’ll use a landmark economic speech on Tuesday to provide his first direct response to U.S. counterpart Donald Trump’s tariff threats.

Xi’s keynote address to the Boao Forum for Asia -- China’s version of Davos -- is being closely watched over Trump’s plan to hit hundreds of Chinese products with duties. So far, Xi has let his ministers and diplomats lead the response, promising a proportionate response to any U.S. actions.

The dispute between the world’s biggest economies threatens to overshadow Xi’s long-awaited remarks to investors marking 40 years after the first reforms transformed China. The country faces a credibility gap after years of promises to free up the economy were followed by more centralized control, market-access barriers and state support for local companies.

Those practices are at the center of Trump’s threats to levy some $150 billion of tariffs against China. The U.S. has asked the the country to reduce its trade surplus by $100 billion, cut tariffs on cars and stop forced technology transfers by foreign corporations, among other things.

“China will take down its Trade Barriers because it is the right thing to do,” Trump said in a tweet Sunday, adding that he and Xi would “always be friends.” “Taxes will become Reciprocal & a deal will be made on Intellectual Property.”

Competing Narratives

The trade spat has put pressure on Xi to counter the U.S narrative during his speech on the resort island of Hainan, which will be attended by leaders including Philippine President Rodrigo Duterte, Singaporean Prime Minister Lee Hsien Loong, and International Monetary Fund Managing Director Christine Lagarde.

“The China-U.S. trade dispute was completely initiated by the U.S. side, who should take the sole responsibility,” Foreign Ministry spokesman Geng Shuang told a regular briefing Monday. “The U.S. is brandishing trade tariffs as a tool, and is meanwhile full of talk about negotiations. We wonder who the intended audience for the U.S.’s show is.”

Since Trump’s election, Xi has presented himself as a champion of the existing global trading system. Last year, he countered Trump’s “America First” campaign promises in a speech at the World Economic Forum in Davos, Switzerland, where he compared protectionism to “locking yourself in a dark room.”

Opening Up

Xi’s top economic adviser, Liu He, told Davos participants in January that China’s reform plans this year would exceed global expectations. Foreign Minister Wang Yi pledged “a series of new reform and opening measures” from Xi.

Investors are waiting to see whether Xi announces new or expanded measures to open China’s financial sector to foreign firms. In November, China said it would remove foreign ownership limits on banks and allow overseas firms to take majority stakes in local securities ventures -- part of its efforts to “substantially” ease barriers in the industry.

Xi may also shed light on government plans to draw more international tourism to the surrounding island Hainan to showcase the country’s reform plans. Bloomberg News reported in February that China was drafting a proposal to allow gambling on the island, as well as relaxing visa rules and building a new airport.

Despite Xi’s rhetoric, many foreign companies operating in China share Trump’s concerns about market access. A January survey by the American Chamber of Commerce in China found that 75 percent of the organization’s members feel increasingly unwelcome.

The Boao speech is Xi’s first international address since getting China’s parliament last month to repeal presidential term limits from the constitution, the only formal barrier keeping him from staying after his current stint ends in 2023. The move was welcomed by international investors at the event for bringing added short-term certainty to the country’s policy plans.

Barclays Plc Deputy Chairman Sir Gerry Grimstone described China as a “beacon of stability” in an interview with Bloomberg Television on Monday. “The fact that Xi is prepared to give such strong authoritarian guidance within the context of a market economy is great for companies like mine,” Grimstone said.

© Copyright 2019 Bloomberg News. All rights reserved.

   
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All eyes are on Chinese President Xi Jinping to see if he’ll use a landmark economic speech on Tuesday to provide his first direct response to U.S. counterpart Donald Trump’s tariff threats.
xi, china, landmark, economic, trade
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2018-06-09
Monday, 09 April 2018 01:06 PM
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