BEIJING—President Xi Jinping set the stage Tuesday for a possible effort to resolve a worsening clash with Washington over technology and trade by promising to cut auto import taxes, improve intellectual property protection and boost imports.
Xi’s pledges at a business conference came as China filed a World Trade Organization challenge over one aspect of its sprawling conflict with U.S. President Donald Trump—last month’s U.S. tariff hike on steel and aluminum.
Strains over U.S. complaints that China is flooding global markets with unfairly low-priced goods and pressuring foreign companies to hand over technology have spiraled into the biggest trade conflict since World War II.
Speaking to Chinese and foreign businesspeople, Xi didn’t mention Trump or their dispute. He pledged progress on areas that are U.S. priorities including opening China’s banking industry but gave no direct response to Trump’s demands such as ending requirements for foreign companies to work through joint ventures that require them to give technology to potential Chinese competitors.
Private sector analysts saw Xi’s speech as an overture to help resolve the standoff that has fueled fears the global economy may suffer a setback if other governments raise their own import barriers.
Trump has threatened to raise tariffs on Chinese goods worth $50 billion. Beijing fired back with its own $50 billion list of U.S. goods for possible retaliation.
In his speech, Xi tried to position China as a defender of free trade, despite its status as the most-closed major economy, in response to Trump’s “America first” calls for import restrictions and trade deals that are more favourable to the United States. The speech was free of the nationalist bluster that increasingly marks Chinese official statements and repeatedly called for international co-operation.
“China’s door of opening up will not be closed and will only open wider,” said Xi at the Boao Forum for Asia.
Xi, the country’s most dominant leader since at least the 1980s, said Beijing will “significantly lower” tariffs on auto imports this year and ease restrictions on foreign ownership in the auto industry “as soon as possible.”
He also promised to encourage “normal technological exchange” and to “protect the lawful ownership rights of foreign enterprises.”
“President Xi’s speech could create a very good platform to launch U.S.-China dialogue at the WTO to find a deal on intellectual property rights,” said economist Rajiv Biswas of IHS Markit in a report. “This would be a victory for the world trading system and an important step away from the abyss of rising global protectionism.”
The dispute is likely to end “with a concession from China,” said Larry Hu of Macquarie Group in a report.
Singapore Prime Minister Lee Hsien Loong, also speaking in Boao, welcomed Xi’s promises.
“We look forward to seeing these strategies elaborated, implemented and bearing fruit,” Lee said, according to a transcript issued by his office.
Meanwhile, Chinese diplomats filed a request at WTO headquarters in Geneva for consultations with Washington over Trump’s tariff hike on steel and aluminum.
If that fails, Beijing can ask for a ruling from a WTO panel of experts. China also has issued a $3 billion list of U.S. goods including pork and apples for possible retaliation.
Chinese officials deny foreign companies are compelled to hand over technology, but business groups say joint venture and licensing rules make that unavoidable.
Last month, the United States filed a WTO complaint accusing Beijing of violating its trade pledges by imposing unfair contract terms and allowing companies to use foreign-owned technology after licensing periods expire.
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.
Xi gave no details on how those conditions might change, leaving it unclear whether that might mollify Washington.
Easing rules that limit the foreign stake in an auto joint venture to 50 per cent might help to address Trump’s complaints about technology as well as giving them more flexibility in their biggest global market.
Jake Parker, the vice-president for China of the U.S.-China Business Council, an industry group, welcomed Xi’s announcement but expressed hope for additional steps such as ending requirements for joint ventures and technology licensing.
“Ultimately, U.S. industry will be looking for implementation of long-stalled economic reforms, but actions to date have greatly undermined the optimism of the U.S. business community,” said Parker in an email.
Xi repeated earlier official pledges to open China’s finance industries to foreign investors but gave no additional details.
The biggest beneficiaries of a cut in China’s 25 per cent tariff on most auto imports will be the handful of automakers such as electric car brand Tesla that have no factory in China. 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, which reached $423 billion last year—about two-thirds of that with the United States.
“China does not seek a trade surplus,” said Xi in comments that were broadcast on national television. “We have a genuine desire to increase imports and achieve a greater balance of international payments.”
The bulk of Xi’s 40-minute speech was devoted to China’s vision for economic development and its global role following a ruling party congress in October that installed him for a second five-year term as leader.
Xi tried to defuse concern about Beijing’s growing military might and territorial disputes with its neighbours, saying his government wants to pursue peaceful, co-operative development.
“We will not bully our neighbours,” the president said. “Cold war thinking and zero-sum games are increasingly obsolete.”