Chinese President Xi Jinping promised on Tuesday to further open the economy and reduce tariffs, including on automobiles, easing tensions that threatened to escalate into a trade war between China and the United States, the two largest economies in the world, agencies report.
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In a speech broadcast live on television, Xi did not directly mention the danger of a trade war with Washington, but through a series of measures, he seemed to want to respond point by point to the attacks from President Donald Trump, reports AFP.
“Chinese doors will not remain closed. They will open wider,” Xi said at the annual Boao Forum for Asia in Hainan province.
China will “enter a new phase of opening, significantly expanding market access” to its banking sector, as well as the security and insurance sectors, and will increase cooperation with foreign financial markets, Xi stated.
“This year, we will significantly reduce import tariffs on vehicles, while also reducing import tariffs on some products,” Xi said in front of international officials, including the Managing Director of the International Monetary Fund (IMF) Christine Lagarde.
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Vehicles imported by China are subject to tariffs of at least 25 percent, which is a major point of contention with the U.S., leading President Donald Trump to accuse China of implementing “protectionist” measures.
The U.S. imposes a 2.5 percent tariff on imported vehicles, reports AFP.
Xi further announced that China will raise the limit for foreign ownership in the automotive sector “as soon as possible” and will expedite the implementation of announced measures to open up the financial sector, Reuters reports.
Foreign business groups welcomed the speech, but noted that it lacked details and did not specify any deadlines.
The U.S. is outraged by China’s trade policy, which it accuses of unfair practices and intellectual property theft.
“China does not want a trade surplus,” Xi said at the Forum.
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There is a huge deficit between the two countries in favor of China, amounting to $375 billion in 2017, according to Washington.
His speech immediately impacted financial markets, with the Hong Kong stock exchange closing the morning up by 1.14 percent.
Fears of a trade war have been pressuring the market for over a month, since Trump first announced tariffs on steel and aluminum imports, and China announced countermeasures as these protectionist measures could harm global economic growth.
After that, Trump threatened to impose an additional $100 billion in tariffs on Chinese products, and China immediately responded that it was fully prepared to retaliate with a “strong counterattack,” i.e., new trade measures if the U.S. proceeded with its threat.
