Xi warns against trade protectionism
CHINA yesterday unveiled a new plan to further open its economy to foreign investment, while in Davos, Switzerland, Chinese President Xi Jinping offered a vigorous defence of globalisation and free trade in a speech at the World Economic Forum.
Likening protectionism to “locking oneself in a dark room” to protect yourself from danger, but at the same time depriving the room of “light and air”, he cautioned other countries against pursuing their own interests at the expense of others.
Xi’s appearance, a first for a Chinese leader at the annual meeting of political leaders, chief executives and bankers in Davos, came as doubts emerge about whether the US will remain a force for multilateral co-operation on issues like trade and climate change.
Xi did not mention Donald Trump in his speech of nearly an hour, but many of the messages he sent seemed directed at the US president-elect, who campaigned for the White House on pledges to protect US industries from foreign competition and levy new tariffs on goods from China and Mexico.
“No one will emerge the winner in a trade war,” Xi warned.
He said economic globalisation had become a “Pandora’s box” for many, but that it was not the cause of many global problems. He added that international financial crises were caused by the excessive pursuit of profits, not globalisation.
Europe, meanwhile, is pre-occupied with its own troubles, from Brexit and militant attacks to the string of elections this year, in which anti-globalisation populists could score gains.
This has left a vacuum that China seems eager to fill.
“It is no coincidence that Xi chose this year to make the trip up the magic mountain,” said Ian Bremmer, the president of Eurasia Group, a US-based political risk consultancy.
Significantly, China’s cabinet issued measures yesterday to further open the world’s second-largest economy to foreign investment, including easing limits on investment in banks and other financial institutions.
China will lower restrictions on foreign investment in banking, securities, investment management, futures, insurance, credit ratings and accounting sectors, the State Council said in a statement. No further details were provided, nor a timetable for their implementation.
The state planner had indicated at the end of last year that the government would take measures to relax foreign investment in certain sectors.
The State Council also said in a statement foreign-invested firms would be allowed to list on the Shanghai and Shenzhen exchanges as well as a New Third Board, the country’s biggest over-the-counter (OTC) equity exchange.
It was the first time the government has made clear that foreign companies will be allowed to sell shares publicly on both the Shanghai and Shenzhen exchanges, apparently overturning a previous plan for an international board in Shanghai. Foreign-invested firms will also be allowed to issue various debt instruments.