In Economic Forum Speech, Chinese Leader Xi Jinping Concedes to US Trade Pressure

China will cut auto tariffs, open up markets, and protect IP, Xi says
By Annie Wu, Epoch Times
April 10, 2018 Updated: October 8, 2018

After weeks of escalating trade tensions between China and the United States over import tariffs, Chinese leader Xi Jinping has finally capitulated to U.S. pressure.

In a speech before the Bo’ao Forum for Asia, held on the southern Chinese island of Hainan on April 10, Xi made it clear that he was willing to concede on several demands that U.S. President Donald Trump has made in pushing China toward a more equitable trade relationship with the United States.

Trump’s April 8 tweet led many to speculate on whether a compromise between the two countries was imminent. “China will take down its Trade Barriers because it is the right thing to do. Taxes will become Reciprocal & a deal will be made on Intellectual Property,” he wrote.

Xi’s words at the Bo’ao Forum, taking a much softer stance compared to the Chinese state media’s aggressive threats of a trade war, suggest that he may be heeding Trump’s wishes. While Xi did not mention Trump or the recent trade disputes specifically, his comments were an obvious response to Trump. 

Just one day before Xi’s speech, Trump had posted on Twitter about the disparity between car import duties imposed by China versus the United States—a point he has repeatedly made to illustrate the trade imbalance between the two countries. “When a car is sent to the United States from China, there is a Tariff to be paid of 2 1/2 percent. When a car is sent to China from the United States, there is a Tariff to be paid of 25 percent. Does that sound like free or fair trade. No, it sounds like stupid trade—going on for years!” Trump wrote on April 9.

Xi said he would reorganize China’s State Intellectual Property Office and strengthen its powers to enforce IP laws.

Xi, in his speech on April 10, said, “This year, we will considerably reduce auto import tariffs, and at the same time reduce import tariffs on some other products.”

On the issue of intellectual property theft—the target of the United States’ recently announced $50 billion to $60 billion in tariffs on Chinese tech goods—Xi said he would reorganize China’s State Intellectual Property Office and strengthen its powers to enforce IP laws. It was one of only a few times Xi has directly addressed this issue.

President Donald Trump and Chinese leader Xi Jinping leave a business leaders event at the Great Hall of the People in Beijing on Nov. 9, 2017. (Nicolas Asfouri/AFP/Getty Images)

A recent report on China’s IP practices, published by the U.S. trade representative, revealed that the Chinese regime has been strategically directing both state-owned and private firms to acquire foreign tech innovations through foreign investments, with the intent of gaining dominance in global markets.

And on the oft-mentioned topic of the U.S. trade deficit with China, which topped $375 billion last year, Xi made an indirect comment: “China does not pursue a trade surplus as its goal.” Xi added that he would work to increase China’s imports—something Xi admits Chinese citizens would welcome—and push for the country’s participation in the World Trade Organization (WTO)’s Agreement on Government Procurement, a treaty requiring fair trade practices for its signatories.

A Chinese woman walks past a billboard boasting of China’s World Trade Organization membership. (Goh Chai Hin/AFP/Getty Images)

Trump had previously expressed his wish for China to cut its trade surplus with the United States by $100 billion, noting that the country’s trade barriers made it difficult for American goods to enter the market.

Xi also spoke about opening up access to Chinese markets, reiterating previous promises made by senior Chinese officials to raise the foreign ownership limit on joint ventures in the auto, shipbuilding, aircraft, and other sectors. Foreign firms are currently limited to a 50 percent stake in joint ventures and cannot establish their own wholly owned factories.

Reactions

Whether Xi will make good on his words remains to be seen. Since at least 2013, Chinese officials have said they would ease restrictions on foreign joint ventures in the auto industry, but have not provided a timeline for that to happen.

A survey released in January by the American Chamber of Commerce in China found that American businesses still don’t feel welcome in China. Fifty-five percent of respondents said restrictions on market participation were their primary concern when it comes to unfair treatment in China.

Some economists have expressed cautious optimism after Xi’s Bo’ao speech.

“President Xi’s speech appears to have struck a relatively positive tone and opens the door to potential negotiations with the U.S. in our view,” said economists at Nomura, a Japanese financial services firm. “But of course actions speak louder than words. We will keep an eye on the progress of those opening-up measures.”

The U.S.-China Business Council expressed hopes for real change. “Ultimately, U.S. industry will be looking for implementation of long-stalled economic reforms, but actions to date have greatly undermined the optimism of the U.S. business community,” said Jacob Parker, vice president of China operations.

Trump remained positive after Xi’s speech. “Very thankful for President Xi of China’s kind words on tariffs and automobile barriers,” he posted on Twitter on April 10. “We will make great progress together!”

Reuters contributed to this report.

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