China’s Xi fails to reassure Europeans on trade dispute with US

Chinese President Xi Jinping attends a signing ceremony with Dominican Republic's President Danilo Medina (not pictured) at the Great Hall of the People in Beijing, 02 November 2018. [EPA-EFE/THOMAS PETER / POOL]

Chinese President Xi Jinping’s landmark speech on Tuesday (18 December) did not contain any new announcements to de-escalate the country’s ongoing trade war with the US, worrying Europeans about the consequences on global commerce.

“No one is in a position to dictate to the Chinese people what should or should not be done,” Xi said in a speech to mark the 40th anniversary of Deng Xiaoping’s “reform and opening up” policy.

The absence of new pacifying gestures towards US President Donald Trump has raised concerns among some policymakers and China experts in Europe.

“Xi did not announce any measures to defuse the looming trade-conflict with the US,” said the head of the European Parliament’s delegation to China, Socialist MEP Jo Leinen.

“Unfortunately, the Trump administration seems to be willing to let the situation escalate into a trade war,” he told EURACTIV.com.

“The lack of a specific announcement of either reforms or stimulus could imply that China has realised that there is limited scope for concessions to the US,” said Alicia García Herrero, senior fellow at Bruegel, a Brussels-based think tank, and chief economist at Natixis for the Asia Pacific region.

Europe to push for trade reforms in critical G20 summit in Buenos Aires

European leaders will pursue a last-ditch effort to improve the global trade system during the meeting of the Group of 20 most powerful nations in Buenos Aires (Argentina) later this week, as the dispute between US and China risks breaking the multilateral framework.

In Herrero’s view, the self-reliance mantra emerging from Xi’s speech could mark “an era of strategic competition and increasing de-linkage of the Chinese and American economies (which) has just begun and cannot be stopped.”

In his 80-minute speech, Xi promised that China will continue walking on the reform path. “What should be and can be reformed, we will resolutely reform. What should not or cannot be reformed, we will resolutely not reform.”

But the lack of new announcement on a day supposed to mark the anniversary of China’s reform path disappointed investors, with stock markets falling in Hong Kong, Shanghai, Tokyo and Sydney.

In a closely watched address, Xi recalled the steady progress achieved by China over the past four decades. The country is now the world’s largest economy in terms of purchasing power parity and its development has lifted 800 million people out of poverty.

“The torments of hunger, lack of food and clothing, and the hardships which have plagued our people for thousands of years have generally gone and won’t come back,” Xi stated.

Domestic audience

The speech was addressed to a domestic audience, with the message that Beijing’s appetite will not be tamed.

“Xi’s speech is the latest sign that China has overturned the decade-long policy of focusing inwards while keeping a low-profile on the international stage,” Leinen commented.

“China will keep intensifying its efforts to shape the future international order,” he predicted.

Trump and Xi’s truce upholds watered down G20 communiqué

A trade ceasefire agreed between the US and Chinese presidents, Donald Trump and Xi Jinping, helped to sustain the defence of multilateralism included in the final G20 declaration in Buenos Aires. 

China recently announced that it would temporarily scrap tariffs on US imports, including soy and cars, following up on the agreement reached between Xi and Trump on the sidelines of the G20 in Buenos Aires this month.

Europe and the US have complained in the past about Chinese subsidies and urged Beijing to open up its economy.

In a speech last November, Xi promised to allow more foreign capital in key sectors and to increase imports.

China responds to Trump’s barriers by opening its wallet

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.

But his latest address rather served to confirm the importance of the state in the Chinese economy.

“Clearly focusing on a domestic audience, President Xi made it very clear that China’s policies would not be influenced by the West,” García Herrero said.

“One could interpret the above as ‘United against the West’ rather than ‘Reform to please the US’ or at least ‘Reform for our own good’,” she stressed.

Against this backdrop, Leinen said that the EU should continue to be “the champion of free, fair and sustainable trade based on international rules”.

The European Commission declined to comment on Xi’s address.

EU and China pledge to deepen relationship despite trade tensions

The EU and China said on Friday (1 June) they would expand trade and investment cooperation amid the global trade dispute triggered by US tariffs. But as part of the efforts to address outstanding trade disputes, Europe will present a complaint before the World Trade Organisation against China’s intellectual property practices.

The speech came as EU countries decided to impose duties on Chinese electric bicycles as a response to alleged unfair subsidies offered by Beijing to exporters of these products.

The Commission proposed that a tariff of between 18.8 and 79.3% should apply for all e-bikes coming from China.

Collaboration

Leinen said that China’s four decades of opening its economy had generated prospects for the country and the world, “many of them very positive in lifting people out of poverty and in offering new possibilities for future growth and collaboration.”

Commission tells China to deliver on promise to open up its market

EU Commissioner for Health and Food Safety Vytenis Andriukaitis told EURACTIV.com that China should deliver on its promise to open up its market, as European companies complain about the difficulties they face in the country.

But he noted that “in recent times particularly, there has been not so much continued ‘opening’ as increased restrictions on civil society in China, on the defence of human rights, the practice of religion and on minority cultures.”

Others still believe that China will not stop its reform push.

“Cynics are right to point out that we’ve heard such promises before,” said Andew Polk, founding partner of Trivium/China research firm. “What’s different now is that top Chinese leaders seem ready to commit themselves personally to more ambitious opening measures,”  he wrote on Bloomberg.

As an example, he mentioned the agreements reached between Chinese and foreign companies backed by high-level Chinese officials. The slowdown of the Chinese economy would also encourage pragmatism in Beijing, he said.

Spain’s trade chief: China’s commitment to open its economy is 'unquestionable'

Spain and China celebrate this year the 45th anniversary of their bilateral relations. In order to continue strengthening this bond, Chinese President Xi Jinping will travel to Madrid in the coming weeks. “We are already seeing that China is opening its markets,”  Spain’s Trade chief Xiana Margarida Méndez told EURACTIV.com.

Subscribe to our newsletters

Subscribe

Want to know what's going on in the EU Capitals daily? Subscribe now to our new 9am newsletter.