This article is part of our special report A new trade framework for shared prosperity.
Chinese president Xi Jinping promised on Monday (5 November) to continue opening up his nation’s economy and to increase imports by fuelling citizens’ spending power, as a response to growing protectionism and unilateralism.
“Multilateralism and the system of free trade is under threat”, Xi told heads of government and business leaders during the opening of the first China International Import Expo (CIIE), held in Shanghai.
In a direct rebuff of US President Donald Trump’s policies, he said that closing borders and fuelling unilateralism brings “trade stagnation and unhealthy world economy”.
In line with his landmark speech in Davos last year, the Chinese president restated his defence of globalisation and the commitment to safeguard multilateralism.
“Openness has become a trademark of China”, he said.
And he added that the door would continue to open “wider” as the country would not stop pursuing an open economy.
This will require “credible action”, he told global leaders, including presidents and prime ministers of a dozen of countries. Hungarian Prime Minister Viktor Orbán was one of the guests of honour.
The first import expo is seen as a signal of China’s willingness to rebalance its export-oriented economy toward a more demand-based growth.
Xi said that the Chinese government will stimulate the potential to increase imports by putting more money in the pockets of over 1.3 billion citizens, the largest national market on earth.
The strategy will include “proactive measures” to increase people’s income and spending power, and to foster new areas of medium and high consumption.
China will also lower tariffs, cut red tape for imports, and increase cross-border e-commerce and new forms of businesses.
Around 3.000 companies from more than 130 countries will show its products in Shanghai, including a flying car made by Slovakian startup Aeromobil.
More than 400,000 Chinese and foreign buyers are expected to attend the exhibition.
Open up the economy
The event comes as the country celebrates its 40th anniversary of the liberalisation of its economy.
Xi said that measures announced last April to reduce investment restrictions have been put in place and will continue to progress in sectors, including finance, farming, mining and manufacturing.
The process will “accelerate” in areas including telecommunications, education or health, where foreign equity caps will be raised.
Xi also wants to “speed up” the negotiation of the EU-China investment agreement, that is progressing slowly after 18 rounds of talks.
The announcement to improve trade in the country came on the heels of the latest World Bank’s report on doing business.
Beijing registered the biggest improvement as it jumped more than 30 positions to reach the 46th position in the global ranking of positive business environments.
World Bank Group President Jim Yong Kim said on the eve of the opening of the CIIE that “we support what China is doing to expand imports and address global trade imbalances.”
European officials and experts had expressed dissatisfaction with the slow progress made following Xi’s past promises.
Xi Jinping also touched upon the intellectual property rights framework, at the heart of China’s dispute with the US and the EU.
He promised to “enhance the credibility” of IPR system and to “protect” the lawful rights of international rights and the interests of foreign companies.
In this context, China will put in place a punitive compensation system to increase the costs for offenders who breach IPR.
The European Commission filed a complaint to the World Trade Organisation in regards to China’s practices in this field.
President Trump has also been critical of the difficulties of accessing the Chinese market for foreign technology companies.
The US Administration did not send any senior official to the event. But US multinationals, including GE and Qualcomm, were represented in the expo.
The tensions between China and the US have decreased following a phone call between Xi and Trump last Thursday.
The call served both presidents to score few points as it was welcomed by stock markets before the CIIE and the US’s mid-term elections.
Amid the growing concerns about Chinese instabilities, including its huge indebtedness, Xi tried to reassure businessmen and decision-makers by stressing that the fundamentals of the Chinese economy remain “unchanged” for long-term stability.
“You have every reason for being confident” about the future of the Chinese economy, he stated.
He said that the output grew at a pace of 6.7% this year and the economy is “truly performing well”.
But he admitted “significant challenges” and “growing risks” in some businesses and sectors.
“The Chinese economy is not a pond but an ocean”, he described. “It may have its calm days, but big winds and storms are only to be expected”, otherwise an ocean would not be what it is.
But after 5,000 years of tribulations over Chinese development, he said that “China is still here, and it will be here to stay”.