President Xi Jinping has promised to cut auto import taxes, open China's markets and improve conditions for foreign companies in a speech that called for global cooperation against a backdrop of a spiralling dispute with Washington over trade and technology.
-China trade dispute. While President Donald Trump continued to bash America's trade deals on Twitter, he said the US and China could settle their dispute.
During an eagerly awaited speech at a development conference on the tropical Chinese island of Hainan, Xi billed the planned cut in vehicle tariffs and a series of other measures as "a new phase of opening up".
"He said "lower" auto import tariffs, which is the opposite of the trend in recent weeks from both the USA and China in "raising" tariffs".
Strains over USA complaints that China is flooding global markets with unfairly low-cost goods and pressuring foreign companies to hand over technology have spiraled into the biggest trade conflict since World War II. The U.S. bought more than $500 billion in goods from China past year and now is planning or considering penalties on some $150 billion of those imports.
The Chinese leader promised to encourage "normal technological exchange" and to "protect the lawful ownership rights of foreign enterprises".
Trump asks, "Does that sound like free or fair trade". -China Business Council, which represents companies that deal with China, welcomed Xi's announcement but expressed hope for additional steps such as ending requirements for joint ventures and technology licensing.
Foreign companies complain Beijing is squeezing them out of promising parts of the state-dominated economy to promote the ruling Communist Party's plans to create Chinese global competitors in fields including robotics, electric cars and pharmaceuticals. "President Xi has ignited a rally in risk assets that might have some legs if the US can keep a lid on the protectionist rhetoric for a while", said Sean Callow, FX strategist for Westpac in Sydney. They now are limited to a 50 percent stake in joint ventures and can not establish their own wholly owned factories.
Chinese regulators announced that intention in November, just after Trump ended a high-profile visit to Beijing, but gave no timeline or details.
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China charges total duties of 25 percent on most imported cars - a 10 percent customs tariff plus a 15 percent auto tax. Other automakers such as General Motors and Volkswagen that assemble vehicles in China with local state-owned partners could offer additional models.
More broadly, Xi repeated official promises to expand imports and to narrow China's trade surplus, another irritant for Washington.
The new White House economic adviser, Larry Kudlow, said Sunday that a "coalition of the willing" - including Canada, much of Europe and Australia - was being formed to pressure China and that the USA would demand that the World Trade Organization, an arbiter of trade disputes, be stricter on Beijing.
More broadly, Xi repeated official promises to expand imports and to narrow China's trade surplus, which reached $423 billion a year ago - about two-thirds of that with the United States. "Xi's apparent desire to balance out his country's global payments is clearly great news for countries and companies selling goods to China".
Based on wire headlines from Reuters, Xi made all the right noises when it came to the outlook for Chinese trade policy, helping to calm investor nerves that have been rattled over the past month as trade tensions between the United States and China increased.
Xi tried to defuse concern about Beijing's growing military might and territorial disputes with its neighbors, saying his government wants to pursue peaceful, cooperative development.
"This is a problem caused by China, not a problem caused by President Trump", Kudlow said on "Fox News Sunday".
He also said "Cold War mentality" and arrogance had become obsolete and would be repudiated. "Arrogance or self-righteousness can only bump into walls at every turn". China has pledged to "counterattack with great strength" if Trump decides to follow through on that threat. Rather than waiting weeks for the USA tariffs to be implemented, Trump backed a plan by Robert Lighthizer, his trade representative, to seek the enhanced tariffs.