Xi’s usual rhetoric leaves US, EU waiting for concrete action
The Chinese President again promises to further open up the economy without coming up with a detailed timeframe
All the fun of the trade fair? Not really. In fact, President Xi Jinping’s much-anticipated keynote speech at the China International Import Expo on Monday was decidedly flat.
Planned policies were rehashed and served up as new to a cosmopolitan audience for this initial annual bash in Shanghai, which is known as the CIIE, a rather glitzy trade fair.
Xi trotted out the usual well-rehearsed speech, including buzzwords such as “reform,” “openness” and “governance.”
Phrases which included “free trade,” “inclusion,” “win-win” and “mutual benefits” also echoed around the National Convention and Exhibition Center.
“The economic and social well-being of countries in the world is increasingly interconnected,” Xi said. “The reform of the global governance system and the international order is picking up speed.
“On the other hand, the world economy is going through a profound adjustment, and protectionism and unilateralism are resurging. Economic globalization faces headwinds, and multilateralism and the system of free trade are under threat,” he added.
Picking through the bones of his speech, there was little fresh meat on offer.
The general secretary of the Communist Party did promise to increase imports and further lower tariffs after vowing to open up education, telecommunications and cultural sectors.
Clamping down on intellectual property theft was also mentioned … again.
“It seems like there were good statements and good headlines, but what we want are concrete actions and a concrete timetable of reform,” Carlo Diego D’Andrea, the chairman for the European Union Chamber of Commerce in Shanghai, said. “We can’t let the CEOs of European companies in China set up their businesses on a foundation of hope that reform will come.”
Excessive bureaucracy, “promise fatigue,” and coercion to hand over intellectual property rights are just three areas of contention for overseas companies.
Last week, the United States and EU business lobbies in China, along with the French and German ambassadors to Beijing, called on Xi’s government to use the trade fair to announce crucial changes aligned to a rigid timetable.
What actually happened was that the president’s comments simply mirrored an earlier speech made at the Boao Forum on the tropical island of Hainan in southern China more than seven months ago.
Back then, he called for greater “openness,” a pledge to relax import controls, as well as moves to reduce red tape for foreign firms.
Fast forward from April and Xi is facing a different permutation of problems.
Beijing is becoming increasingly anxious about a cooling economy buffeted by a drop in consumer spending and a dip in factory activity. Third-quarter GDP growth has also been hit, falling to levels not seen since the 2009 Great Recession.
At the same time, the economy is going through a transformation from low-cost production to high-tech manufacturing, coupled with a growing service industry and a more sophisticated consumer sector.
But realigning the economy and being embroiled in a trade war with the US has taken its toll.
“Markets seemed to like the headline ‘to cut import tariffs,’ but this plan was already announced in September and can only be milked so many times,” Sue Trinh, the head of Asia FX Strategy at RBC Capital Markets in Hong Kong, told Bloomberg.
During the past six months, international relations with the West have deteriorated as quickly as the economy.
Tariffs worth more than US$250 billion have already been slapped on Chinese imports to the US by the White House.
President Donald Trump has also threatened to impose duties on the remaining goods and products worth another $258 billion, citing “unfair practices” and “intellectual property violations.”
In response to a weakening economy and a markets meltdown, Beijing has wheeled out a stimulus-inspired package after nearly $3 trillion were wiped off the Shanghai Composite Index and $1.1 trillion off Shenzhen in the past nine months.
This, in turn, has hit the spending power of more than 150 million middle-class investors, who are vital to the retail industry.
So, when financial and economic bruising started to appear in China from the trade brawl, it was hardly surprising that Xi would throw a verbal uppercut at Trump.
“All countries should strive to improve their business environment and solve their own problems,” Xi said at the CIIE. “They shouldn’t always whitewash themselves and blame others or act like a flashlight that only exposes others but not themselves.
“Today, with the deepening of economic globalization, ‘law of the jungle’ and ‘winner-takes-all’ are a dead end,” he added.
Still, later this month, Xi hopes to meet Trump at the G20 summit in Buenos Aires to help thaw out what has become a new economic Cold War. Hopefully, there will be more on offer than just hot air.