Xi renews pledges to open economy, cut tariffs this year

Chinese President promises to open economy, lower tariffs

BOAO/BEIJING: Chinese President Xi Jinping promised yesterday to open the country's economy further and lower import tariffs on products including cars, in a speech seen as an attempt to defuse an escalating trade dispute with the United States.

While most of the pledges were reiterations of previously announced reforms, which foreign businesses complain are long overdue, Mr Xi's comments sent stock markets and the dollar higher on hopes of a compromise that could avert a trade war.

Mr Xi said that China will sharply widen market access for foreign investors, a chief complaint of the country's trading partners and a point of contention for US President Donald Trump's administration, which has threatened billions of dollars in tariffs on Chinese goods.

"President Xi's speech appears to have struck a relatively positive tone and opens the door to potential negotiations with the US in our view. The focus now shifts to the possible US response," economists at Nomura said.

"But, of course, actions speak louder than words. We will keep an eye on the progress of those opening-up measures."

The speech at the Boao Forum for Asia in the southern province of Hainan had been widely anticipated as one of Mr Xi's first major addresses in a year in which the ruling Communist Party marks the 40th anniversary of its landmark economic reforms and opening up under former leader Deng Xiaoping.

Mr Xi said China would raise the foreign ownership limit in the automobile, shipbuilding and aircraft sectors "as soon as possible" and push previously announced measures to open the financial sector.

"This year, we will considerably reduce auto import tariffs and at the same time reduce import tariffs on some other products," he said.

He also said "Cold War mentality" and arrogance had become obsolete and would be repudiated.

His speech did not specifically mention the US or its trade policies, which have been assailed by Chinese state media in recent days.

Chinese officials have been promising since at least 2013 to ease restrictions on foreign joint ventures in the auto industry, which would allow foreign firms to take a majority stake.

They currently are limited to a 50 per cent stake in joint ventures and cannot establish their own wholly owned factories.

Foreign business groups welcomed Mr Xi's commitment to reforms, including promises to strengthen legal deterrence on intellectual property violators, but said the speech fell short on specifics. - REUTERS