China committed to trade cooperation
Two years ago, President Xi surprised many observers with his passionate support for free trade and the global rules-based order built around the World Trade Organization. Some observers dismissed this as platitudes designed to embarrass the newly elected Trump.
They were wrong.
Yesterday, speaking at the opening of the China International Import Expo (CIIE) in Shanghai, Xi again reaffirmed China commitment to free trade and to lowering of trade barriers and tariffs. His speech came just a day after Premier Li threw China's support behind the Regional Comprehensive Economic Partnership (RCEP) in Bangkok. These two speeches are evidence of China's genuine commitment to free trade and a further opening up of China's capital and investment markets. It is a robust refutation of the narrative loudly proclaimed by Trump.
Xi covered five areas and each of these will have a significant impact on investment and business decisions. For those who choose to really listen, these five areas point the way to a greater and more stable trade relationship that offers benefits, not just for one country, but for all participants. These five areas are consistent with the philosophy of the Belt and Road Initiative, and with the philosophy of the RCEP agreement announced in Bangkok.
Xi has not retreated from his 2017 statement in Davos where he opposed the growth of protectionism in favour of a continuous reduction in trade barriers to improve the efficiency of supply chains. These were not empty words, and the RCEP is a positive example of the reduction of trade barriers. This will help boost economic growth within the ASEAN and provide an alternative market environment to the increasingly closed markets of the United States.
Investors will look more carefully at logistics chains, port and trade facilities and at companies that can now grow with the benefit of reduced industry tariffs.
Many of these nations have benefited from the structure and safety of the WTO umbrella. Although not perfect, the WTO framework has enabled national and global economic growth. China's reaffirmed support for the WTO is welcomed by most WTO members. Rather than dismantling or sabotaging the WTO, there is a growing genuine desire to support and reform the WTO. Xi has indicated that China will not retreat from these core values and this will boost the outlook for ASEAN and global markets.
This commitment to the free flow of trade is endorsed with China's steps to further cut tariffs, to nurture innovation and to expand the import of high-quality services and products. This is an open invitation for service companies to expand and participate in the growth of the Chinese economy. These reforms include the further removal of barriers to foreign investment in a range of new areas. The negative list of off-limits investment areas will be reduced and this in itself will encourage direct foreign investment.
Those that have questioned China's commitment to nurturing a more sophisticated, multi-platform economy have been caught napping. Xi at CIIE demonstrated a record of improvement in the business environment as it becomes more internationalized and market orientated. At CIIE he reaffirmed China's commitment to this development path.
Business groups, like the Australia China Business Council, welcome this continued commitment.
Smart investors have already used the opening of capital markets to buy into the most advanced internet companies in the world. Investors who have been sitting on the sidelines now have the opportunity to take a direct investment confident in the ongoing support for this liberalized trading environment. China, with more listed companies than in the US market, offers an excellent range of investment choices. Already the best performing market in Asia this year, the speech from Xi will propel the Shanghai index higher.
The author is president of the North Territory office for the Australia China Business Council.
The opinions expressed here are those of the writer and do not necessarily represent the views of China Daily and China Daily website.