The past few weeks have beed quite volatile for world markets. Much of this ferment has been caused by the escalating possibility of a major trade war between the world’s two largest economies: China and the United States. Both countries have made some efforts to tamp down the friction. Recently, in a major speech, President Xi Jinping laid out plans to make China’s domestic economy more accessible for global business. As covered by CNBC, here’s a summary of his speech:
Increasing China’s Imports
President Xi indicated that China does not want a trade surplus. Instead, he said, China would prefer to increase imports with the goal of a “greater balance of international payments.”
With respect to autos, President Xi indicated that China will “will significantly lower tariffs on imports of automobiles, and also loosen restrictions on foreign ownership in the auto sector”. China is a big market for US automakers GM and Ford.
“China will speed up its efforts to open up the insurance industry and ease restrictions on the establishment of foreign financial firms domestically,” according to the President’s comments. Up to now, China has been reticent to open its financials sector to global participants.
Importantly, President Xi spoke directly about intellectual property, saying “We encourage normal technological exchanges and cooperation between Chinese and foreign enterprises, and protect the lawful IPR owned by foreign enterprises in China.” Piracy of intellectual property has been a thorny issue between the US and China for some years.
The Trump Response
According to CNBC, US President Donald Trump, using one of his favorite media, tweeted that he was “very thankful” for President Xi’s “kind words on tariffs and automobile barriers … also, his enlightenment on intellectual property and technology transfers.”