China Pledges Openness in Hopes of Reaching a Trade Deal – Smart Media Magazine

China Pledges Openness in Hopes of Reaching a Trade Deal

BEIJING — Top Chinese economic policymakers promised this weekend that Beijing was ready to open up the country’s economy to more market-based competition and international trade, in the latest sign of strong Chinese interest in ending a multi-billion-dollar trade war with the United States.

Senior American officials are scheduled to come to Beijing in the coming days for trade talks, with Chinese officials then heading for Washington the following week in an attempt to wrap up a deal.

But Chinese officials have an extra incentive in pledging to loosen their hold over the world’s No. 2 economy, and not just to the Trump administration. In addition to a trade war that is hitting the country’s exporters, China’s economy has also been hurt by private sector business leaders who have become increasingly cautious in recent months about making new investments.

The economy has slowed, creating a self-reinforcing cycle of skepticism that further private investments will be profitable. State-owned enterprises have claimed a growing share of the loans available in the economy, a sign that the government may be crowding out the private businesses that could drive future growth. Xi Jinping, the country’s leader, has insisted that the Communist Party play an ever-greater role in corporate decision making and daily life.

The promises of economic opening may sound familiar. Chinese officials have said for years that they were ready to allow foreign competitors to enter their market on a more equal footing, with slow progress. The promises made over the weekend in many cases repeated pledges that have been made before, such as to open the country’s financial sector more widely to foreign investment.

The tone of remarks at this weekend’s session of the China Development Forum, the country’s premier annual economic policy conference, was nonetheless striking. It appeared to represent a coordinated effort to present an international image of China as a country moving in the direction of greater economic openness.

Han Zheng, one of the seven men who run the country as members of the Communist Party’s Politburo Standing Committee, said that China wanted to keep increasing imports. “We do not strive for a trade surplus,” he said.

Yi Gang, the governor of the central bank, said that China wanted more foreign investment. He said the government was looking for ways to let foreign investors trade derivatives and other financial instruments so as to limit their exposure to risk. Such a move could mean loosening Beijing’s controls over the value of its currency — a politically sensitive subject, and one in which Beijing has a mixed record — and Mr. Yi offered no details.

Mr. Han, Mr. Yi and other senior officials took turns extolling a new foreign investment law approved by China’s legislature on March 15, describing it as a carefully thought-out framework for making the country a more appealing place to invest.

“China never pays lip service,” said Han Wenxiu, the executive deputy director of the powerful, policy-setting General Office of the Central Financial and Economic Affairs Commission. “We will honor our words and act on them.”

Foreign lawyers have described the law as vague, noting that a third of the provisions are no longer than one sentence each and that domestic companies are still covered by separate legislation.

The Trump administration had consistently taken a hard line for many months on retaining the tariffs on the $50 billion a year in goods. The administration has been much more willing to discuss removing a 10 percent tariff imposed last autumn on another $200 billion a year in goods.

But corporate lobbyists in Washington have mounted a strenuous campaign for the repeal of all tariffs, including on the $50 billion in goods. Chinese officials have been hoping that campaign would be successful.

An extensive interagency effort by civil servants and political appointees produced the $50 billion list of products. They came up with product categories in which they did not want the United States to become more dependent on China. Some products were included for reasons of national security, like components for nuclear reactors and aircraft. Other products were on the list because they were deemed important for economic security, including cars using gasoline, diesel or electricity.

China needs to ramp up car exports because its home market, by far the world’s largest, has slowed sharply since last summer, That has left dozens of factories operating at half of capacity or less. Xi Guohua, the president of China’s FAW Group, a giant automaker, said at the forum that automakers and their suppliers directly or indirectly employed 12 percent of the country’s work force. Other estimates have been lower.

At a separate gathering on Friday afternoon that was organized by the Center for China and Globalization, a Beijing research group, former senior American and Chinese officials also expressed worry about whether the broader relationship between China and the United States could be quickly fixed even if a trade deal were reached soon.

Former Treasury Secretary Lawrence H. Summers warned that worries about China had become bipartisan.

“There is a better than even chance that the Democratic candidate in 2020, in speaking about foreign policy, will criticize Trump for being too conciliatory toward China,” he said.

He Yafei, a former Chinese vice minister of foreign affairs, said that a visit to the United States last September had persuaded him that the climate in Washington had been altered.

“Change has taken place, a fundamental change in the approach to take to China,” he said. He added that as he looked at the broad bilateral relationship, “my view of the future is probably the one that will neither be benign or tragic, but up and down.”

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