Published: Tue, April 10, 2018
Economy | By

Xi vows to further open China economy as USA trade spat simmers

Xi vows to further open China economy as USA trade spat simmers

Volvo and General Motors both make cars in China and export them to the U.S.

"China does not seek a trade surplus", Xi said.

Trump, in light of what he called China's "unfair retaliation" against earlier USA trade actions, had upped the ante on Thursday by ordering U.S. officials to identify extra tariffs, escalating a tit-for-tat confrontation with potentially damaging consequences for the world's two biggest economies.

On Tuesday morning, Chinese President Xi Jinping addressed the 2018 Boao Forum for Asia in Hainan, which runs through Wednesday.

"With the tariffs on some of these electrical appliances, the USA might have to source these products from other countries in the region and Malaysia could potentially benefit from it", he said.

"Economic globalisation is an irreversible trend of the time", Xi told the Boao Forum for Asia.

With no news due out on Monday, traders are keeping a close eye on the trade war and anxiously awaiting Washington's response to China's latest comments.

Xi gave no details on how those conditions might change, leaving it unclear whether that might mollify Washington.

China has denied such allegations and responded in kind, mainly targeting products made by farm states that helped Mr. Trump win the election in 2016. "If the United States announces an additional $100 billion list of tariffs, China has already fully prepared, and will not hesitate to immediately make a fierce counter strike".

A full-blown escalation of tariffs is not in the interest of either the United States or China.

Meanwhile, the sanguine view on the trade war is fuelling expectation that the U.S. dollar will resume its three-year downtrend, giving Asian central banks room to hold off on rate rises as the region's currencies appreciate.

"China created this problem, and the president is trying to put pressure on them to fix this, and take back some of the awful actions that they've had in the last several decades", said White House press secretary Sarah Huckabee Sanders during the daily briefing Friday.

The speech was attended by leaders including Philippine President Rodrigo Duterte, Singaporean Prime Minister Lee Hsien Loong, and International Monetary Fund Managing Director Christine Lagarde.

Elon Musk, CEO of electric vehicle giant Tesla asked for Trump's help on the issue this year, alluding to the troubles his firm has faced to producing in China.

"Hence the investment action will be a critical piece of this", he said.

Discussion of the trade dispute also touched on the possibility of China leveraging its massive holdings of US government debt, which has been dubbed the "nuclear option". The US has also not only focused on curbing the rise of Chinese products in US markets that have led to the staggering $375 billion deficit in China's favour, but it has also opted to look into using anti-dumping regulations against many Chinese products as well.

THE QUOTE: "Market nerves over trade tensions have seemingly calmed down, given that Trump has sounded optimistic on the prospects of a trade deal with China, notwithstanding Chinese protestations", said Chang Wei Liang, analyst at Mizuho Bank.

According to Xi, Chinese authorities will also take a number of steps to facilitate access of foreign investors to the market of the country, particularly in such spheres as service sector, banking sector, insurance, shipbuilding and aircraft industry among others.

President Donald Trump recently announced that he meant to impose tariffs on about $50 billion in Chinese imports, citing the United States' massive trade deficit with the country.

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