Xi warns against trade pro­tec­tion­ism

The Star Early Edition - - BUSINESS REPORT -

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.

Open doors

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.

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