China should do more to avoid a trade war with US

Chinese President Xi Jinping was quick to send a message to the world and the United States as trade tensions rose on Tuesday. Xi promised to further open up the Chinese economy and lower import tariffs on products including cars, and focused on four goals: loosening restrictions on foreign business ownership, creating a friendlier environment for foreign investment, strengthening intellectual property protections and increasing imports. It sounded like a conciliatory approach but there’s little reason to believe that Chinese leaders would willingly do anything on this front any time soon. The Made in China 2025 policy, for instance, requires firms to transfer technology in return for access to the Chinese market, and there is no sign China is budging on this front.

Moreover, if we run through some of speeches of the Chinese premier, we know there is hardly anything new in what he has said now. Xi had been making similar promises over the last year or so — after the Xi-Trump summit in November, and at Davos — without offering any definitive timeline on when such ambitious changes would take place. This time, too, the leader refrained from making any references to the when and how. Markets have nonetheless reacted positively, and so has US President Donald Trump, who spared no time to congratulate his counterpart. “Very thankful for President Xi of China’s kind words on tariffs and automobile barriers,” he tweeted. Yet, it shows the inability of the US to determine China’s course of action. Time and again, American leaders have poured efforts through diplomatic and commercial engagements and now tariffs, only to be disappointed. Beijing has not opened up politically or on the economic front in line with its global standing. There is deep distrust about Xi’s words and actions. Chinese leaders must understand and appreciate the benefits of free trade policies championed by the West, particularly the US, which has helped it thrive and pull millions out of poverty. It would do well to step back and abide by accepted norms of trade. Else, there’s no escaping from trade war, which will hurt everyone.