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Concession to Trump? China’s Xi Pledges to Open Markets, Cut Tariffs

Concession to Trump? China’s Xi Pledges to Open Markets, Cut Tariffs

Xi promised to “significantly lower” tariffs on auto imports.

https://www.youtube.com/watch?v=F4Zv1Sr2kvI

In a speech on Tuesday, Chinese President Xi Jinping announced the country will open its markets and slash tariffs on auto import.

It appears to be a concession to President Donald Trump, who has threatened tariffs on Chinese goods, which has led to fears of a trade war.

Xi did not mention Trump in his speech, but he promised to open China’s markets “and improve conditions for foreign companies.” Fox News continued:

“We will take the initiative to expand imports,” Xi said during his keynote speech at the opening of the Boao Forum for Asia, China Plus News reported. “China does not seek trade surplus; we have a genuine desire to increase imports and achieve greater balance of international payments under the current account,” he said.

Xi said Beijing will “significantly lower” tariffs on auto imports this year and ease restrictions on foreign ownership in the auto industry as soon as possible.

China charges total duties of 25 percent on most imported cars — a 10 percent customs tariff plus a 15 percent auto tax. Since December 2016, Beijing also has charged an additional 10 percent on “super-luxury” vehicles priced above $200,000.

The U.S. bought more than $500 billion in goods from China last year and now is planning or considering penalties on some $150 billion of those imports.

CNBC said that Xi described “China as a benevolent leader of the global economy, emphasizing that open systems are the best course of action for the world.” Man, us libertarians have been saying that years! CNBC continued:

“We must refrain from seeking dominance and reject the zero-sum game, we must refrain from ‘beggar thy neighbor’ and reject power politics or hegemony while the strong bully the weak,” Xi said.

Instead, he said, countries should “stay committed to 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.”

“This way, we will make economic globalization, more open, inclusive, balanced and beneficial to all,” he added.

Bloomberg noted that many watched Xi’s speech due to an impending trade war, but also because China has long promised to open its markets and yet went the other way with “more centralized control, market-access barriers and state support for local companies.”

Trump proposed $150 billion in tariffs on Chinese goods. The administration asked China “to reduce its trade surplus by $100 billion, cut tariffs on cars and stop forced technology transfers by foreign corporations, among other things.”

It looks like China still has some work to do. Bloomberg Economics Chief Asia Economist Tom Orlik said America “will likely want to see deeds, not just words, before it considers softening its protectionist stance.”

He’s probably right considering, as I wrote above, China has said this before. Actions do speak louder than words. But are these words just hot air?

On Bloomberg Gadfly, David Fickling and Anjani Trivedi remind us how many cars China imports:

China imports just over 1 million cars into its 20 million-a-year-plus auto market. Of that amount, most are German-branded luxury SUVs. Nomura Holdings Inc. analysts estimate General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV exported around 50,000 to 60,000 cars from the U.S. to China last year worth around $2 billion, versus the more than 150,000 luxury SUVs that BMW AG and Daimler AG sent from their U.S. factories.

It’s cheaper for the companies to build cars in China than in North America, which means the “makers of prestige vehicles whose volumes aren’t large enough to justify a local plant” will likely benefit the most from “lower import taxes.”

Xi’s speech has helped the U.S. stock market, which took a dip after Xi and Trump engaged in a heated rhetorical exchange on tariffs. From The Wall Street Journal:

The Dow Jones Industrial Average rose 369 points, or 1.5%, to 24348. The S&P 500 climbed 1.3%, and the technology-focused Nasdaq added 1.4%.

Tech stocks were among the best performers in the S&P 500, rising 1.4%. Apple shares climbed 1.7%, while Microsoft added 1.5%. Shares of Facebook were the outlier, falling 0.1%, ahead of Chief Executive Mark Zuckerberg’s scheduled testimony about the social-media company’s handling of personal user data later Tuesday.

Gains for U.S. stocks came as the Stoxx Europe 600 climbed 1.7%. Asian stocks also rose after the Chinese president pledged to significantly broaden market access this year.

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Comments

notamemberofanyorganizedpolicital | April 10, 2018 at 3:04 pm

“Betta-Boom, Betta-Bing!”

WIN!

Tiny article in CNN mentioning Xi speech, not much on Trump unless you mean the story about the hookers that is front and center.

It looks like China still has some work to do.

China hasn’t done any work at all.

Bloomberg noted that many watched Xi’s speech due to an impending trade war, but also because China has long promised to open its markets and yet went the other way with “more centralized control, market-access barriers and state support for local companies.”

Not only is it just talk so far, it’s the same old talk we get every time anybody even mentions the possibility of doing something about it.

Man, us libertarians have been saying that years!

An endorsement from Xi is not a feather in anybody’s cap.

“Trump proposed $150 billion in tariffs on Chinese goods.”

No. He proposed tariffs on 150 billion dollars worth of Chinese imports.

Explicit tariffs. There is also environmental, labor, and monetary arbitrage, which preclude or hamper functional markets, as they mimic monopolies or monopolistic conditions in practice.

stevewhitemd | April 10, 2018 at 5:12 pm

It’s a start but as Ronnie Reagan used to say, “trust but verify”. The Chinese have to follow-through. In the usual political world that point would be lost but I think Trump’s business instincts will allow him to keep his eye on this one.

We don’t have “free trade” — we never have had “free trade” in the modern world. We have managed trade, governed by complex rules, treaties and pacts that (apparently) seem to put the U.S. at some disadvantage, just about every single time. That’s why ordinary people like what Trump is doing here — they know that the trade isn’t free, and that all Trump is doing is taking a hard line to get a slightly better deal.

More please.

ima go with this is propaganda they have no intent on following through with.

one should not trust the ChiComs any farther than you can throw their country.

Ignore anything that the Chinese say, which is in any way conciliatory. They are still building their military and are deploying more assets to the South China Sea. This is CYA. If a shooting war starts it will spun as due to the totally unreasonable actions of the US, in the face of China’s good faith attempt to placate Trump. It also give the CoC and the Establishment leverage to claim that China backed off and the tariffs should be repealed.

Close The Fed | April 10, 2018 at 10:41 pm

Trump is doing great. Even if at this point it’s just talk, I’m sure he’ll do his damnedest to turn it into action.

One thing is certain: I’d rather be Trump than Xi. The U.S.A. is THE best market in the world. China needs us, more than we need China.

And I’ll repeat: Nixon made a big mistake opening up China. Huge.

Love the way you can read article after article on this in the legacy Liberal press and not see a single line crediting Trump for having brought this about.

For weeks they’ve been slamming him as some kind of lunatic for pressuring China on trade. Now, he’s starting to get what he wants, and the absolute last thing they’ll ever do is apologize for their earlier slanders.

“He’s discriminating against China! Racist!”

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