(Bloomberg) -- President Xi Jinping reiterated China’s commitment to economic openness and the global trading order, as officials close in on the first phase of a deal to end the trade war with the U.S.
“China will give greater importance to imports. We will continue to lower tariffs and institutional transaction costs,” he said in a keynote speech at the start of a trade expo Tuesday morning in Shanghai. “We must all put the common good of humanity first rather than place one’s own interests above the common interests of all,” he said.
Xi’s comments are consistent with China’s efforts to position itself as a champion of the global multi-lateral trading order at a time when the U.S. is backing away from institutions like the World Trade Organization. Xi also said that China would “open its doors only wider” to the world, a stance that helps to counter allegations of protectionism from the Trump administration.
The government has placed greater emphasis on imports as a way to meet the needs of domestic consumers, which China is relying upon to push economic growth away from investment and exports. At the same time, the import push helps buttress the argument that China is seeking to reduce its trade surplus, especially with the U.S.
In 2018, Xi said that China’s goods imports were estimated to total over $30 trillion in the following 15 years, implying a slight addition to current annual totals. In fact, imports have contracted on an annual basis almost every month this year, 5% lower in dollar terms at the end of September than the same period in 2018.
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Xi urged deeper economic integration and said China was willing to sign high-standard free trade agreements with more countries. “We need to tear down walls, not erect walls. We need to stand firm against protectionism and unilateralism. We need to continually bring down trade barriers, optimize global supply chains and jointly foster market development,” Xi said. “Integration of the economy is the order of the day.”
Economic Showcase
The speech came as Xi and U.S. President Donald Trump work to assemble a “Phase One” trade agreement that will leave many of their thorniest problems to future negotiations. U.S. officials including Commerce Secretary Wilbur Ross have expressed optimism about the pact, which might include increased Chinese purchases of U.S. agricultural products, keeping its currency stable and further opening its financial market.
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The China International Import Expo -- now in its second year -- is designed to showcase the country’s desire to shift its economy toward consumption by buying more foreign goods. While some 63 countries are participating in the event, including French President Emmanuel Macron, the U.S. and most other Western nations are either sending lower-level delegations or none at all.
Although the first CIIE yielded hundreds of deals and agreements, especially in the energy sector, few have come to fruition, according to a report released Monday by the European Union Chamber of Commerce in China. Half of the expo’s surveyed participants managed to make deals last year, and many saw “no follow-through” as their partners failed to fulfill obligations, the report said.
“We expect this year’s event to be supplemented by concrete measures to facilitate further market opening and increase foreign investment, not by empty promises that we have heard many times before,” said Carlo D’Andrea, vice president of the European Chamber.
On Again, Off Again
Xi’s speech was somewhat softer in tone that his address to the first CIIE a year ago, where he took some veiled swipes at Trump’s “America First” polices, denouncing “law of the jungle” and “beggar-thy-neighbor” trade practices. Since then, the two leaders have held a series of on-again, off-again trade talks interrupted by tariff salvos.
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He didn’t specifically mention the U.S. or Trump, but argued against pursuing unilateral interests -- the core of Trump’s philosophy in international forums.
The trade war has increased pressure on the Chinese economy just as it was cooling from decades of unprecedented growth. China’s list of economic headaches also include factory-price deflation, a fragile financial system and spiraling food costs in the wake of a catastrophic disease epidemic among the nation’s pig herd.
Last week, Xi told a gathering of the Communist Party’s Central Committee that “the severity of risks and challenges we face is unprecedented,” according to the official Xinhua News Agency.
Chinese state media reiterated the country’s need for the removal of punitive tariffs to be included in any deal.
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“For China, removing all the additional tariffs is a core concern that has not changed and will never change,” said Taoran Notes, a blog affiliated with the state-run Economic Daily. “Even if there is a first-phase deal, this core concern should be reflected.”