China Ready To Lower Import Tariffs And Trade Barriers, Xi Says

Apr 10, 2018
Originally published on April 10, 2018 7:34 am
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RACHEL MARTIN, HOST:

Chinese leader Xi Jinping promised today to open China's economy up even further for foreign investments and to lower tariffs on foreign automobiles. His speech comes in the middle of this ongoing standoff between the U.S. and China over trade. NPR's Rob Schmitz joins us live from our Shanghai bureau this morning to talk about this. Hey, Rob.

ROB SCHMITZ, BYLINE: Good morning.

MARTIN: What can you tell us about the timing of this speech?

SCHMITZ: Well, obviously this comes amidst a pretty big buildup in what many people think is a trade war or a coming trade war between the U.S. and China. And a lot of people, I think, were expecting Xi Jinping to make a stand against the U.S. today. This is a really heavily hyped speech. But instead what we got was a speech that was sort of filled with poetic language about peace and harmony and coming together to solve global problems. Xi said that China would seek to reduce its trade surplus, which is, as we know, a big pet peeve of President Trump's. He also vowed China would improve its investment environment. Here's a snippet of what he said.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT XI JINPING: (Through interpreter) Peaceful development is what people need. Cold War and zero-sum mentalities are increasingly obsolete.

MARTIN: So President Xi in this speech outlined ways that China would help foreign companies essentially have a better experience inside China. What exactly is he suggesting?

SCHMITZ: So he said China would lower its 25 percent tariff on imported cars as soon as possible. Now, that seems on the surface a big thing for U.S. carmakers, but it's worth pointing out here that U.S. automakers like GM and Ford now make nearly all the cars they sell in China at factories inside of China. So this likely won't have a very big impact. However, Xi also promised that China would relax the limits on foreign ownership of auto manufacturing inside of China. Now, up until now U.S. automakers have been forced to form joint ventures with Chinese companies when they enter China. So this could be a bigger deal. Xi also promised that China would do a better job of protecting intellectual property. And, of course, this is at the heart of the Trump administration's trade actions against China. So it seems like with this Xi was giving Trump what he wanted to hear.

MARTIN: Interesting. So I mean, on the one hand, you can look at this and say this kind of sounds like China is softening their position, an olive branch of some sort to the Trump administration. But at the same time, China also announced today it's going to file this complaint with the WTO on the Trump administration's steel and aluminum tariffs, right?

SCHMITZ: Right. Yeah. You know, and it's interesting. You know, the WTO complaint China filed today requests a 60-day consultation period with the U.S. So that could be a good thing or a good sign if it gets both sides to the table. But, you know, back to Xi Jinping's conciliatory tone in his speech today, this might be a good sign, too, but this is not the first time the Chinese have vowed to reduce tariffs on foreign cars, or even to lift limits on foreign ownership of companies inside of China. I spoke to Peking University economist Christopher Balding about Xi's promises today, and he said U.S. companies working in China are suffering from promise fatigue when it comes to all of China's past promises and its lack of action. Here's what he said.

CHRISTOPHER BALDING: They don't want to hear promises anymore of how China is going to open up, but they want to see the execution of actually opening up and changing the laws, making it more transparent for business to operate.

SCHMITZ: Now, that said, I think it's important to point out today that we had Xi Jinping making these promises, not his underlings. And he did so with timelines for action. So I think today's speech was more than just empty promises. On the other hand, you know, one thing U.S. companies and the Trump administration would like to see is China making meaningful changes to some of its industrial policies that are forcing foreign companies into transferring technology to China. And Xi Jinping made no promises on that today.

MARTIN: NPR's Rob Schmitz reporting from Shanghai this morning. Thanks so much, Rob. Transcript provided by NPR, Copyright NPR.