BOFIT Viikkokatsaus / BOFIT Weekly 2018/15

In his speech to the Boao Forum for Asia on Tuesday (Apr. 10), president Xi Jinping reaffirmed his commitment to gradually opening of China's economy to the world. He noted China and other countries have benefited from decades of China's ongoing opening process and continuation of the process will remain important in the future. While Xi did not mention the deterioration in US-China trade relations, he implied that China is responding to concerns raised by the Trump administration.

Xi, for example, promised that this year China would implement measures to open up its financial services markets as promised last November. The moves include elimination of foreign ownership restrictions on banks and financial services firms. Deregulation of foreign insurance companies will also be accelerated. In industrial fields, China plans to ease rules "as fast as possible" for foreign-owned car manufacturers, the aerospace industry and shipbuilders. These are fields in which foreign firms are currently required to form joint ventures with Chinese firms to gain access to the Chinese market. China also plans to lower import tariffs on certain goods – most notably cars, which currently are subject to a 25 % import tariff.

Investing in China should become easier once the government revises its "negative list," which specifies those branches in which foreign investment is restricted and requires special government permission. Other investments will be treated like domestic investments and not require government clearance beforehand.

Violation of intellectual property rights has topped the US litany of complaints in the current trade dispute. China is addressing these concerns by reopening the state intellectual property office and increase punishments for violators. China will also seek to accelerate its compliance with the WTO Government Procurement Agreement, which it committed to as part of its WTO accession in 2001.

Several of the reforms presented by president Xi have been earlier proposed but never made it to the implementation stage. The US said it was encouraged by Xi's message, but would still like to see words backed with action. The EU Chamber of Commerce in China has wishes similar to the US and seeks more detailed information with which to evaluate the policy shift. News reports are conflicting as to whether China and the US are already in talks on resolving the impasse.