China tosses a trade bone to US

Nearly 40 years since starting to liberalise its economy, China’s adoption of a fully fledged market economy is still far from complete. But one thing it has picked up from the democratic capitalist West along the way is an ability to spin small changes in policy to placate its international partners.

China showed its prowess in this area by offering some trade liberalisation measures after President Xi Jinping’s meeting with his US counterpart, Donald Trump, last week in Washington DC. Beijing is ready to lift a hygiene-related ban on beef imports from the US, which has been in place since 2003 and to remove some restrictions on foreign companies investing in its financial services sector.

By giving Trump some impressive sounding victories to tout at home, China may hope to forestall some of the wilder protectionist acts the US president has been threatening. Yet ironically, one of the outcomes it is keen to avoid — having the administration label China a currency manipulator — is one for which there is no basis and hence it can do little to affect. It is genuinely innocent.

China’s decision was designed to make a big noise without necessarily changing very much. The pronouncement on beef involved a highly symbolic US product. The agreement to open its financial services sector, meanwhile, may not make a dramatic difference in reality. Western companies are likely to be chary about plunging into a debt-laden Chinese financial system.

The selective nature of Beijing’s policy change underlines the fundamental problem with its trade and regulatory policy. Despite more than 15 years’ membership of the World Trade Organisation, China’s economy remains resistant to foreign investment in many sectors and its trade is distorted by regulatory interference. London, April 11.