Xi eyes more open economy as China, US trade spat widens

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Xi eyes more open economy as China, US trade spat widens

President Xi Jinping promised Tuesday to cut China's auto tariffs and improve intellectual property protection in possible concessions aimed at defusing a worsening dispute with Washington over trade and technology that investors worry could set back the global economic recovery.

As seen in the chart below from Westpac Bank, China's trade surplus with the United States has ballooned over the past decade as exports to the USA grew substantially faster than imports heading in the other direction.

"China's door of opening up will not be closed and will only open wider", Xi said at the Boao Forum for Asia on the southern island of Hainan.

The pledge addresses one of the gripes of US President Donald Trump, who has threatened to impose new tariffs on $150 billion of Chinese goods in a tense trade dispute between the world's two largest economies.

In November, China's Ministry of Foreign Affairs said the country would attempt to raise the limit on ownership by foreign investors in the new-energy vehicle sector from the current 50 per cent, allowing worldwide carmakers to take a controlling stake or have full ownership of their mainland operations. "That's why we've seen tech and biotech performing very strongly today".

"The U.S., in the next round of tariffs, could start targeting goods that the Chinese do mostly produce themselves", he said.

Rather than waiting weeks for the US tariffs to be implemented, Trump backed a plan by Robert Lighthizer, his trade representative, to seek the enhanced tariffs.

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Xi didn't mention Trump or the United States in his speech, but he stressed the need for dialogue and warned against a "Cold War mentality".

Trade talks between the world's biggest economies broke down last week after the Trump administration demanded that China take steps to curtail support for high-technology industries, a person familiar with the situation said.

The move comes after the Trump administration said China was facing $50 billion dollars in potential tariffs.

Trump was referring to China's threats to impose tariffs on US soybeans, frozen beef and other agricultural goods, which have already pushed down prices for those commodities.

But the stakes are higher in the dispute over China's aggressive technology policies. But business groups from outside China argue that joint venture and licensing rules make coerced transfers of technology unavoidable.

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

On Tuesday, he took a veiled swipe at Trump's "America First" polices. Trump has "demonstrated a resoluteness, and that signals to China's leaders that we're serious".

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