China’s Xi rejects Cold War mentality, pitches for open economy & trade

china-boao-xiAmid the rising wave of protectionism and escalating Beijing-Washington trade war, Chinese President Xi Jinping has rejected “Cold War mentality” and projected himself as an apostle of globalization at the Boao Forum for Asia in the island of Hainan.

“China’s reform and opening up will definitely succeed and a Cold War mentality, zero sum thinking and isolationism are outdated,” Mr Xi told top industrialists, entrepreneurs and thought leaders at the Boao Forum.

“Only by adhering to peaceful development and working together can we truly achieve win-win results,” he said.

The Chinese leader’s comments were a veiled critique of US President Donald Trump’s America First world view and protectionist policies.   In an indirect jibe at Mr Trump’s policies, he said: “Paying attention only to one’s own community without thinking of others can only lead into a wall. And we can only achieve win-win results by insisting on peaceful development and working together”.

The big message coming out from Mr Xi’s speech was his commitment to open the Chinese economy in a range of sectors, including banking and automobiles. He also unveiled a host of initiatives, which included significant reduction of import tariffs on car, reduction of foreign ownership limits on manufacturing and increasing protection of intellectual property rights of the foreign firms in China. These steps will enhance China’s attractiveness for foreign investment.

Mr Xi’s address came amidst the escalating trade war between China and U.S for the past few weeks where both the countries took turns to announce severe tariff on each others’ imports.

Without directly mentioning Washington’s claims over China’s failed attempts to open up the economy, Mr Xi reemphasizes Chinese vision to ensure “openness, connectivity and mutual benefits, build an open global economy, and reinforce cooperation within the G-20, APEC and other multilateral frameworks.”

“We should promote trade and investment liberalization and facilitation, support the multilateral trading system.”

U.S stock index futures and Asian stocks markets jumped as Mr. Xi announced his initiates to open China’s market and stressed on his commitment to multilateral trading order.

“This is a promising signal that there can be a path forward to address (America’s) concerns without a full-on trade war emerging,” said Stephen Ezell, vice president of global innovation policy at the Information Technology & Innovation Foundation who previously has criticized China’s aggressive trade policy.

“Xi’s remarks on expanding imports and broadening market access are seen as conciliatory gestures to ease the trade frictions,” said Ken Chen, Shanghai-based strategist with KGI Securities Co.