Xi spells out China’s ‘opening up’ policies on trade, investment
BEIJING – In a move which observers say could de-escalate trade tensions between China and the United States, China’s President, Xi Jinping, has announced more ‘opening up’ policies that will benefit foreign companies participating in the China market.
The initiatives were unveiled by Xi in a keynote address to the annual Boao Forum, which is being hosted by China in Hainan Province.
Xi detailed policies in four key areas –
Further opening China’s financial and manufacturing sector;
Improving the investment environment for international companies;
Enforcing legal intellectual property protection for foreign firms; and
Voluntarily expanding imports to China to promote the current account balance.
In regard to the financial sector, BBVA says in a research note that China will first implement the opening-up policies announced in November of last year.
These include removing foreign ownership limits on banks while allowing overseas firms to take majority stakes in local securities ventures, fund managers and life insurance companies.
In the manufacturing sector, as most manufacturing sectors have been already opened, emphasis will be put on easing market entry in automobile, airplane and ship manufacturing.
To improve the investment environment for international companies, China will, in the first half of 2018, complete revision of its negative list on foreign investment.
China has also established a host of new agencies, such as the State Administration for Market Regulation, as part of a major readjustment of Government institutions.
The purpose of this initiative is to remove systematic and institutional obstacles that prevent the market from playing a decisive role in resources allocation.
To enforce legal intellectual property protection for foreign firms, China is re-instituting its State Intellectual Property Office, and says it will step up law enforcement, significantly raise the cost for offenders and “fully unlock the deterrent effect of relevant laws”.
China will significantly lower import tariffs for vehicles and reduce import tariffs for some other products during 2018. In addition, it will import more products that are competitive and needed by the Chinese people and will stimulate domestic demand in order to narrow its trade surplus.
BBVA says Xi’s address comes at a time when tensions between China and the United States risk developing into full-blown trade war and China is losing its allure for global investors.
“The new opening-up policies announced by President Xi, which demonstrating China's commitment to opening up, could release tensions to some degree and re-boost market confidence on China,” BBVA says.
“However, this does not mean that the trade war risk will be totally de-escalated or eliminated by these policies. The probability of a trade war is still depending on negotiation results between the two sides.
“ We expect China and the US to eventually reach an agreement to avert a trade , despite recently escalated rhetoric.
“Moreover, China needs to push forward deleveraging in over-capacity industries as well as other important items on its reform agenda - including SOE reforms and the financial regulatory framework - to strengthen domestic demand in the long term.” www.bbvaresearch.com (ATI).