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John Ross: Xi`s Boao Forum speech shapes globalization agenda

2018-04-16

By John Ross    Source: China.org.cn    Published: 2018-4-11


Xi Jinping`s address at this year`s Boao Forum for Asia presented another step on the path in which China`s presidential speeches shape the international agenda, following on the clear precedent set at last year`s World Economic Forum at Davos.


This time, the international focus of the speech was shaped by two unique circumstances. The first is the current unilateral threat to the global economy by the U.S. administration`s choice to go outside World Trade Organization (WTO) regulations and impose tariffs on steel, aluminium, and US$50 billion of Chinese exports. The second is the venue – the Boao Forum is becoming "Asia`s Davos," not only drawing major representatives from the continent, but also serving as the stage where China unveils major policy initiatives. The impact of Xi`s speech was therefore seen through both the comments of analysts and through the immediate reaction by global financial markets.


In outlining a positive agenda, President Xi chose not to express open differences with other state leaders. But beyond analyzing individual measures presented in the speech, it is crucial to see the overall framework, which clearly shows China has become a pillar of globalization against protectionist trends.


Xi Jinping`s defence of globalization was indeed unequivocal: "Over the last four decades, the Chinese people have embraced the world with open arms and actively contributed our share to the world." He added, "For any country or nation to achieve rejuvenation, they must follow the logic of history and the trend of the times in their pursuit of progress and development."


He went on to highlight China`s national policy as falling in line with international trends: "China`s reform and opening-up meets its people`s aspiration for development, innovation and a better life. It also meets the global trend toward development, cooperation and peace."


"We must dispel the clouds to see the sun, as we say in Chinese, so as to have a keen grasp of the law of history and the trend of the world," said Xi.


This thread follows from Xi`s speech at Davos last year, in which he stressed that "economic globalization is a result of growing social productivity, and a natural outcome of scientific and technological progress."


In short, China`s national line of advance falls firmly in line with globalization, and with the principles that China`s national interests are complimentary to other countries` interests, and that national self-interest is the firmest guarantee that a course will be pursued.


In underlining this point, Xi explained that China`s fundamental interest in globalization is to participate in international division of labor and efficiency so as to improve people`s living standards and national well-being. It is not in pursuit of trade imbalances, as he declared firmly: "China does not seek trade surplus."


Due to its efficiency and price competitivity, particularly in medium technology sectors, China does have a trade surplus at present – though not a very large one in proportion to its GDP. As former U.S. Treasury Secretary Larry Summers stated in the Financial Times, "Today China`s global surpluses are far below past U.S. negotiating targets of a few years ago." However, to continue to benefit from globalization, China aims to even further reduce this surplus by increasing imports. As Xi said, "We have a genuine desire to increase imports and achieve greater balance of international payments under the current account."


To help achieve this balance, China plans to hold its first International Import Expo in Shanghai in November. Xi said countries from around the world are welcome to participate in the Expo: "It is not just another expo in an ordinary sense, but a major policy initiative and commitment taken of our own accord to open up the Chinese market." As China is the world`s second largest economy, the world`s largest goods-trading nation, and the largest contributor to global growth, it would be in the interest of other countries to enhance their position in China`s market.


Xi also announced additional immediate steps rising from this fundamental strategic framework of support for globalization and opening up:


· China will significantly lower import tariffs on vehicles and reduce import tariffs on some additional products this year.


· China will seek faster progress toward joining the WTO Government Procurement Agreement.


· China will strengthen protection of intellectual property rights (IPR) as it is a requirement of both foreign enterprises and Chinese companies.


· China will complete the revision of its "negative list" on foreign investment in the first half of the year, meaning foreign investment will be permitted in any sector which is not specifically and explicitly protected.


· China will accelerate the international opening-up of the insurance industry, ease restrictions on the establishment of foreign financial institutions in China to expand their business scope, and open up more areas of cooperation between Chinese and foreign financial markets.


· In manufacturing, China has already basically opened up this sector with a small number of exceptions on automobiles, ships and aircraft, and will now ease the 50 percent foreign ownership limit on automotive joint ventures.


The announcements attracted the attention of both media and specific companies who may be affected by the measures.


While Xi did not specifically highlight the contrast between China`s specific measures and the U.S.`s recent protectionist steps, the different implications for other countries were clear. Globalization, by nature, is multilateral – trade and international investment necessarily involve more than one country. By adopting a path of unilateralism that is acting outside the agreed international framework of the WTO, the U.S. may threaten China and other targeted countries now, but it potentially threatens all countries by extension. Furthermore, instead of attempting to expand trade, the U.S. is seeking to restrict it via tariffs.


The Trump administration`s unilateral imposition of tariffs would, under any circumstances, present a serious threat to the health of the global economy. But it is even more dire in the present situation, when the global economy is at last enjoying its most sustained synchronized recovery since the international financial crisis of 2008. U.S. tariffs threaten now to disrupt this.


In this context, the Boao Forum, backed by the weight of China and reinforced by Xi Jinping`s speech, is of particular importance as a pillar of globalization – an issue that will continue to be of the greatest significance not only to China but to all economies which are seeking a way forward in national development.


John Ross is Senior Fellow at the Chongyang Institute for Financial Studies, Renmin University of China.



Key Words: Boao Forum   China   Xi Jinping   John Ross  

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