President Xi Jinping declares China open for business
Publication: The Australian
Author: John Durie
Chinese President Xi Jinping was on hand yesterday to open the China International Import Expo designed to show China is open to global markets for business.
Trade Minister Simon Birmingham led the Australian delegation of more than 150 companies, including Gina Rinehart’s beef operations and ACE’s Ryan Stokes.
The logic in Australian companies wanting access to the Chinese market is self-evident, but the politics behind this year’s event are red hot as an outright trade dispute looms.
The US goes to the polls tomorrow with broad bipartisan support for President Donald Trump’s decision to demand concessions from the Chinese.
Outside official groups there is also concern on the Chinese side that no one really knows the answer and just how China can satisfy the US demands.
The feeling in China is that the US is ramping up demands but adding to its list of concessions on a daily basis, leaving China with little chance to answer the demands.
In China, the thinking is that Trump is asking for too much.
The US protectionism has hurt China at a time when more people are raising concerns about its own debt levels and the stability of the financial system.
No one is thinking it’s about to collapse, but the rate of economic growth is slowing and as that happens more questions will be asked.
The official Chinese response has been to push its own reform and its mantra about opening the local economy. The Chinese mantra says its reforms in opening the local economy also help foreign companies, so it’s a win-win.
This was reiterated yesterday when Xi said China would seek to “step up” moves to stimulate domestic consumption of imports, lower tariffs, ease customs clearance procedures and implement harsh punishments for intellectual property infringements.
The government also remains supportive of its private companies. This is shown by the landmark agreement to add Alibaba’s Ant Financial to its list of systemically important financial companies, joining the major banks.
Ant was also included among financial conglomerates such as China Merchants on the list of finance companies on which China is imposing restrictions to curb spending.
Ant has more than $US266 billion ($370bn) in its money market fund and is a huge micro lender in China, operating as a quasi-bank.
While imposing controls on the finance companies, China is also poised to cut taxes if necessary if the economic slowdown continues.
Fei Jiang, the deputy editor of Caixin magazine, told an Australian media briefing in Shanghai no one in China wants the increasing global tension and there is widespread acceptance that maybe China has pushed it too hard.
Former trade minister Andrew Robb, in Shanghai for the trade convention, says much of the US concern comes down to the simple fact that China has emerged as a genuine threat to US economic power and the US is having difficulty accepting reality.
He also expresses concerns that security issues are being accepted without balancing the economic impact.
Australian business interests have been damaged by the increasing anti-Chinese rhetoric from Canberra and the domination of intelligence services in the debate.
The answer from Australia’s side is relatively straightforward — the government needs to tone down the rhetoric. Australian business clearly wants more and better access to China so doesn’t need the anti-China rhetoric at government level.
Europeans have stepped into the battle, telling China it is open for business even if the US isn’t.
Self-interest is ruling the world and until one side backs down the final outcome remains uncertain and potentially dangerous to small countries like Australia.