China’s President Xi Jinping has signaled his intent not to escalate trade friction with the United States, by proposing rule based commerce, which would interlink intellectual property rights with free flow of hi-technology.
Addressing the annual Boao Forum for Asia on Tuesday, Mr. Xi pledged that China would robustly protect foreign intellectual property in tune with the lifting of hi-technology curbs by developed nations.
"We hope developed countries will stop imposing restrictions on normal and reasonable trade on high-tech products, and relax export controls on such trade with China,” he observed. The President also appeared to position China as the locomotive of globalisation—a stance that contrasted sharply with US President Donald Trump’s pitch for protectionism as the touchstone for his country’s economic revival.
"Cold War and zero-sum mentalities look even more out of place" in this era of globalisation, Mr. Xi said." “Whoever rejects change, who refuses to innovate, who will lag behind the times, will be eliminated by history,” he observed.
In an immediate gesture of China’s intent to step back from a possible trade war, Mr. Xi said that China "will significantly lower import tariffs for vehicles" this year. Analysts say that the current 25% duty on vehicle imports can be lowered to as much as 10%.
The President highlighted that foreign ownership limits would be expanded in the manufacturing sector, especially automobiles, implying foreign ownership stakes could exceed the current 50% bar. Financial companies would also be permitted a higher ownership cap, but details will be unveiled by the end of June.
Mr. Xi underscored that a crackdown on theft of intellectual property—the trigger of a U.S. investigation which has earmarked Chinese products worth $50 billion for higher tariffs. Beijing will "significantly raise the cost for offenders and unlock the deterrent effect of laws," the President observed.
But he also highlighted that IPR protection was a two-way street. "We encourage normal technological exchanges and cooperation between Chinese and foreign enterprises, and protect the lawful IPR owned by foreign enterprises in China," Mr. Xi said.
Amid fears that China , already the world’s second largest economy would overtake the U.S. both in economic heft and eventually military power, the President pointed out that China will not attempt to overturn the existing international system.
The country will "stay as determined as ever to build world peace, contribute to global prosperity and uphold the international order". Mr. Xi also sought to assuage concerns that his signature Belt and Road Initiative (BRI) for Eurasian integration concealed China’s larger geopolitical aspirations. “China has no geopolitical calculations, seeks no exclusionary blocs and imposes no business deals on others”.
Mr. Xi’s comments triggered a positive reaction in financial markets, which had been jolted by the threat of a China-US trade war. South China Morning Post quoted Robert Koopman, the chief economist at the World Trade Organisation, as saying that it “would be very interesting to see the reception to Xi’s words today in Washington”.
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