China's president promises to cut auto import tariff

Randall Padilla
April 10, 2018

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.

Speaking at a business conference, Mr Xi made no direct mention of his American counterpart, Donald Trump, or the tariff spat.

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 U.S. grew substantially faster than imports heading in the other direction.

TRADE WORRIES: Indexes are fluctuating in recent sessions as they try to guess the outcome of the U.S.

Mr Xi said Beijing will "significantly lower" tariffs on auto imports this year and ease restrictions on foreign ownership in the auto industry "as soon as possible".

In an attempt to reduce the trade imbalance between the two nations, the United States has proposed tariffs on $US150 billion in Chinese imports entering the country, accounting for around 6.6% of China's total exports previous year.

He also said "Cold War mentality" and isolationism would "hit brick walls".

Chinese Vice Premier Liu promised at the World Economic Forum in January that China would roll out fresh market openings this year, and that it would lower auto import tariffs in an "orderly way".

Chinese officials have been promising since at least 2013 to ease restrictions on foreign joint ventures in the vehicle industry, which would allow foreign companies to take a majority stake.

Easing rules that limit the foreign stake in an auto joint venture to 50 percent might help to address Trump's complaints about technology as well as giving them more flexibility in their biggest global market.

Tesla's chief executive Elon Musk has railed against an unequal playing field in China and wants to retain full ownership over a manufacturing facility the company is in talks with the Chinese government to build there.

"This is a very important action by China".

China is threatening the tariffs in response to Trump moving to enact protectionist measures as punishment for Chinese theft of US intellectual property.

Xi's comments prompted a largely positive reaction in financial markets, which have been rattled over the past week on fears the tit-for-tat U.S.

Xi tried to position China as a defender of free trade and cooperation, despite its status as the most-closed major economy, in response to Trump's "America first" calls for import restrictions and trade deals that are more favorable to the United States.

But Vice Commerce Minister Qian Keming said at the forum on Tuesday that China's economic reforms were driven by domestic factors and not due to external pressures.

Xi repeated earlier official pledges to open China's finance industries to foreign investors but gave no additional details.

Chinese officials deny such charges, and responded within hours of Trump's announcement of tariffs with their own proposed commensurate duties.

Trump has threatened to raise tariffs on Chinese goods worth $50 billion. None of the announced duties have been implemented yet, offering room for negotiation.

Oil markets rose by more than 1 percent on hopes that the trade dispute between the world's two-largest economies may be resolved without greater damage to the global economy.

President Donald Trump is complaining about "STUPID TRADE" with China, saying that Chinese tariffs for US cars are much higher than USA tariffs for Chinese automobiles.

Other reports by AllAboutTopnews

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