A setback with India and continuing
negotiations with the United States test Beijing’s talk of lowering global
barriers.
By
Keith Bradsher
 |
|
Xi
Jinping, China’s top leader, speaking during the opening ceremony of the second
annual
China International Import Expo in Shanghai on Tuesday.
Credit
Wu Hong/EPA, via Shutterstock
|
SHANGHAI
— Xi Jinping, China’s top
leader, broadly endorsed free-trade principles and promised to welcome foreign
investment in a speech on Tuesday, but a setback with India and a lack of
details toward ending the punishing trade war with the United States are
testing Beijing’s ability to prove it can make a deal.
Speaking at the opening of the second annual
China International Import Expo in Shanghai, Mr. Xi indirectly criticized the
Trump administration when he briefly denounced unilateralism.
“Economic globalization is a historical
trend,” he said, comparing the momentum to the world’s great rivers. “Although
there are sometimes some waves going backward, and even though there are many
shoals, the rivers are rushing forward and no one can stop them.”
Most of Mr. Xi’s remarks were devoted to
promising that China would maintain its long-running programs of economic
reform and opening up. Many Western economists have suggested that during his
seven years in power, Mr. Xi has gradually shifted China’s economy back toward
a greater reliance on domestic industries, especially state-owned enterprises.
Mr. Xi sought to portray a different image on
Tuesday morning, saying that the Communist Party’s top leaders in a meeting
last week reaffirmed the principle that China must engage more with the rest of
the world.
“China will open its doors only wider to the
world,” he said. “China will adhere to the fundamental state policy of opening
up.”
The question is whether China will open up
fast and far enough for the Trump administration, which has made Beijing’s
management of the world’s second-largest economy a major sticking point toward
resolving the trade war.
Chinese and American negotiators reached the
outlines of a “first phase” trade agreement in Washington on Oct. 11. The
framework calls for China to make large-scale purchases of American farm goods
and improve protections for intellectual property. In exchange, the Trump
administration committed to roll back at least some of its recent increases in
tariffs on Chinese goods. The two sides have been working out the details ever
since.
Previous plans for Mr. Xi and President Trump
to conclude a deal on the sidelines of the Asia-Pacific Economic Cooperation
summit meeting at the end of next week in Chile were thrown into disarray when
the Chilean government canceled the meeting because of street protests in the
capital, Santiago. Mr. Trump has suggested that a signing could be held in Iowa
instead.
Mr. Xi did not mention on Tuesday when, where
or even whether an agreement might be signed.
In what could be a good-will gesture by
Beijing in connection with efforts to settle the trade war, China’s central
bank allowed the country’s currency, the renminbi, to strengthen slightly in
trading on Tuesday. The renminbi breached the symbolically important level of 7
to the dollar for the first time since early August.
A marginally stronger renminbi may make
Chinese exports a little less competitive in foreign markets, and makes goods
from overseas a little cheaper in Chinese markets. Mr. Trump has long accused
China of systematically undervaluing its currency to obtain an unfair advantage
in trade.
But most economists say that while China may
have done that a decade ago, it has not done so lately. If anything, China has
been preventing its currency from sliding further as its economy weakens, by
putting ever more stringent limits on the ability of Chinese companies and
families to move money out of the country.
The import expo opened a day after seven
years of trade talks, strongly backed by Beijing to produce a free-trade
agreement that would span much of Asia, produced a mixed outcome.
Senior officials from 10 Southeast Asian
nations plus China, Japan, South Korea, Australia and New Zealand mostly
resolved their differences in talks ending in Bangkok on Monday, and hope to
sign an agreement next year, the Thai government announced after hosting the
talks.
China had high hopes for the agreement, known
as the Regional Comprehensive Economic Partnership. Whatever way the trade war
with Washington ends, the prospect of more tensions between the two countries
has put pressure on Beijing to open more markets for its companies and
factories.
But in a setback for trade negotiators, India
announced on Monday that it would not join the new free-trade area. India had
participated in the negotiations from the beginning.
Since the 15 other countries already have a
variety of free-trade agreements among one another, the addition of India, with
few such agreements, was supposed to be the main benefit of the new pact. But
Indian officials have worried that cutting tariffs would mean a flood of
Chinese manufactured goods that might put Indian factories out of business.
India had its own free-trade demands that
China was wary of meeting. India sought a pact that would allow it to export
its vast array of low-priced, generic pharmaceuticals to China — a potent
source of competition that China’s pharmaceutical industry resisted.
India also asked for broader access to the
Chinese market for its formidable business outsourcing industry, including easy
visa access for Indian software engineers to come work on projects in China.
With China’s tech industry already starting to slow and lay off workers,
however, that proposal received a frosty reception from Beijing.
Mr. Xi nonetheless welcomed the outcome of
the Bangkok negotiations, telling import expo attendees that he had learned of
the result with “hope that the agreement will be signed into force as soon as
possible.”
China’s trading partners and business groups
are pushing Beijing to do more on other fronts to knock down trade barriers.
For example, China is trying to complete
regulations for a new legal code governing foreign investment by January. The
National People’s Congress, China’s rubber-stamp legislature, approved the new
legal code in March, but it was little more than a framework, with some
critical issues addressed by only a single sentence and the details left to be
resolved in the regulations.
Carlo Diego D’Andrea, the chairman of the
European Union Chamber of Commerce in Shanghai, said on Monday that draft
regulations released last month offered some improvements. But by preserving a
separate legal code for foreign investors, he said, the new arrangement ensures
that foreign businesspeople would not be treated equally to domestic investors.
At the same time, China continues to impose
many rules that deeply frustrate foreign investors, he said.
“You have hundreds of regulations and
indirect barriers that make your life miserable doing business here,” Mr.
D’Andrea said.
The import expo was designed to promote an
image of China as a big customer for foreign exporters and as a proponent of
free trade. More than 3,000 companies from around the world sent delegates or
opened exhibit booths at Shanghai’s immense convention center, which has five
times the exhibition space of the Javits Convention Center in New York City.
For all of China’s difficulties in striking
deals, other global leaders have echoed Beijing’s criticism of the Trump
administration. Mr. Trump has picked trade fights with allies and rivals alike,
upsetting a global trade order that underpins much of the world’s economic
activity.
President Emmanuel Macron of France, speaking
after Mr. Xi at the opening ceremony, also indirectly criticized the Trump
administration’s confrontational approach to demanding trade policy changes
from China.
“Should we just resort to unilateralism,
tariffs and the law of the jungle?” Mr. Macron asked. “Is that the way forward?
I don’t think so.”
Keith Bradsher is the Shanghai bureau chief
of The Times. He previously served as Hong Kong bureau chief, Detroit bureau
chief, Washington correspondent covering international trade and then the
United States economy, telecommunications reporter in New York and airlines
reporter. Follow him on Twitter: @KeithBradsher
