China's Xi renews pledges to open economy, cut tariffs this year

Ann Santiago
April 10, 2018

Stocks were trading lower in pre-market Friday on news that President Trump has asked US trade officials "to consider" an additional $100 billion in tariffs against China imports, on top of the $50 billion previously announced.

According to Xi, Chinese authorities will also take a number of steps to facilitate access of foreign investors to the market of the country, particularly in such spheres as service sector, banking sector, insurance, shipbuilding and aircraft industry among others.

His comments follow a week of escalating tariff threats sparked by USA frustration with China's trade and intellectual property policies.

President Donald Trump says he's going to "make it up" to farmers who would be impacted by China's proposed retaliatory tariffs on USA exports.

At a time of heightened trade tensions between the United States and China, there's naturally going to be a lot of interest in what Xi has to say, especially among those in financial markets. -China tariffs will explode into a full-scale trade war in a blow to global growth.

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.

As seen in the chart below from Westpac Bank, China's trade surplus with the United States has ballooned over the past decade as exports to the U.S. grew substantially faster than imports heading in the other direction.

"The consumer segment that focuses on the domestic market will be shielded from the negative impact of the escalation in the trade fights between the USA and China".

China responded with a tit-for-tat trans-Pacific scowl of its own, announcing a 25 per cent tariff package focused on agriculture, aerospace and other products US companies send to China.

Trump has long said he considers bullish stock indices to be a sign of his success, but the threat posed by his trade policies seems to run counter to that.


President Trump has taken particular aim at what the US calls unfair Chinese practices that force American companies to transfer technology and that permit cybertheft. Chinese officials deny such charges, and responded within hours of Trump´s announcement of tariffs with their own proposed commensurate duties.

Chinese Vice Premier Liu He promised at the World Economic Forum in January that China would roll out fresh market openings this year, and that it would lower auto import tariffs in an "orderly way".

China's global surpluses are now far below the USA negotiating targets of a few years ago, China has spent about $1 trillion propping up its currency, and intellectual-property protections are far better enforced.

"In the world´s perception, the U.S.is overshadowed by an anxiety disorder and is very keen to show its anxiety", the newspaper said.

Those practices are at the center of Trump's threats to levy some $150 billion of tariffs against China.

Xi's comments prompted a largely positive reaction in financial markets, which have been rattled over the past week on fears the tit-for-tat U.S.

China repeatedly says that the US acceptance that Taiwan and China are one country is the political bedrock for healthy ties between them. Where can investors hide in the event of a full-blown trade war?

Xi said in a speech to China's annual meeting of parliament in March that Taiwan would face the "punishment of history" for any attempts at separatism, his strongest on the issue warning yet.

He pledged to cut import tariffs on cars and relax requirements for foreign firms investing in China.

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