Li Keqiang, Chinese Premier, Reaches Out to Trump and Business

0
88


DALIAN, China — A top Chinese leader made an unusually public effort on Tuesday to ease trade tensions somewhat with the United States, woo foreign investors and reassure his own country’s citizens that their economy remained on track.

In meetings during the World Economic Forum in the Chinese port city of Dalian, Premier Li Keqiang, China’s No. 2 official, promised to cut tariffs, loosen limits on foreign investment, protect intellectual property and allow foreign companies to apply for China’s generous subsidies for research and development. He made many of those comments in a rare question-and-answer session in the afternoon with executives from Japan, the United States and other countries.

He also said that China would allow foreign financial services companies into its market a year earlier than previously promised, and that it would rewrite many rules on foreign investment.

“We will move up the lifting of foreign capital limits in securities, futures and life insurance, from 2021 to 2020,” Mr. Li said in a morning speech, prompting a burst of applause from a crowd that appeared to include many bankers and others in finance. “This shows China’s commitment to opening up.”

Many of Mr. Li’s comments lacked details, and they recalled similarly vague promises made by Chinese officials in the past. Still, the timing suggested a willingness to appear conciliatory at a fraught time.

The Trump administration has imposed 25 percent tariffs on nearly half of China’s exports to the United States, prompting a few companies to move operations elsewhere to supply the American market and causing many more companies to consider doing so. President Trump has urged companies to shift operations from China to the United States or elsewhere.

Mr. Trump and his Chinese counterpart, Xi Jinping, agreed at a meeting on Saturday during the Group of 20 summit in Osaka, Japan, that they would restart trade talks. But neither side made any mention of returning the negotiations to where they had been in early May, when the talks collapsed. That means high trade barriers will remain in effect with little sign of coming down anytime soon.

Mr. Li’s remarks to the foreign executives were the Chinese government’s most public effort so far to persuade them not to move supply chains out of China. In welcoming television cameras into the afternoon meeting, a rare move for a Chinese leader, he also sought to reassure the Chinese public that even if some supply chains were moved elsewhere, the Chinese economy would not be much affected.

“While investors relocate some parts of their production lines to other countries, they have also increased investment in other parts of production capacity here in China,” he said.

Even if China follows up on some or most of Mr. Li’s pledges, ending the trade war may require more dramatic action.

The collapse of trade negotiations in early May occurred mainly because Chinese negotiators, in essence, withdrew previous offers to amend many of the country’s laws to reduce favoritism toward its homegrown businesses. The prospect of rewriting Chinese legislation in response to the demands of a foreign power had stirred a nationalistic backlash within the Chinese leadership and civil service.

The Trump administration has focused on persuading China to curtail lavish government subsidies to exporters and to companies that want to rival foreign firms in sectors like commercial aircraft, semiconductors and electric cars. The Trump administration contends that these policies create unfair, government-backed competitors for American companies and workers.

China has resisted putting limits on subsidies, which it regards as having been highly successful in building up its huge industries.

China’s legislature approved a new legal code for foreign investment in March, giving the government a face-saving way to justify changes in other laws without appearing to acquiesce to American pressure. But the document approved by the legislature was only a few pages long and provided overarching goals, with few specifics.

Mr. Li said on Tuesday that regulations to implement the new code would be made public early next year. He promised that the new rules would make sure that foreign companies and Chinese companies were treated equally.

Over the weekend, China also slightly trimmed some of its many longstanding restrictions on foreign investment in specific industries.

American negotiators are likely to see these commitments as symbolic gestures rather than major shifts. The Trump administration has been less preoccupied with helping companies invest in China and more worried about increasing exports of American goods to the country.

Though Mr. Li pledged on Tuesday that China would lower tariffs, he offered no specifics. China has been reducing them overall in recent months, even as it was adding extra retaliatory tariffs on goods from the United States amid their trade war.

China’s move on foreign financial services would allow international securities firms and insurers to control brokerages and other businesses in China. Currently, foreign firms are allowed only partial stakes. China pledged a year and a half ago to allow foreign firms more leeway.

Tim Stratford, a former American trade official who is now the chairman of the American Chamber of Commerce in China, expressed cautious optimism after Mr. Li’s speech that the Chinese government might make substantive changes.

“He’s the head of a very large government and the challenge is to transmit that vision through the whole government,” he said.

But Mr. Stratford noted that China had lost a World Trade Organization legal case in 2012, after not following through on a commitment it made when it joined the W.T.O. in 2001 to open its market to foreign credit cards. China’s civil service is still working on regulations to let them in.

Mr. Li also made a carefully hedged promise that China would maintain the overall stability of its currency, the renminbi, and would not seek to devalue it so as to gain a competitive advantage in trade.

If the renminbi’s value declined against the dollar, that would make Chinese exports cheaper in terms of dollars and more competitive overseas, while making imports of foreign goods more expensive and less competitive within China. The United States Treasury has been putting pressure on China for many years not to devalue its currency, fearing the effects on trade competition as well as disruption of financial stability in China and some of its Asian neighbors.

But on Sunday, Mr. Trump unexpectedly spoke favorably of a modest decline in the value of the renminbi over the past year. He noted that the weakening of the renminbi had offset, for American consumers, some of the costs of his tariffs on Chinese goods.



Source link

LEAVE A REPLY

This site uses Akismet to reduce spam. Learn how your comment data is processed.