Since Donald Trump became U.S. president, Chinese President Xi Jinping has emerged as one of the protectors of the global trade order. Given the rigid control that his government maintains over its economy, there is a striking gap between his claims and the reality of China's economic policies. This week, Xi again staked out a position in opposition to that of Trump, promising to continue to open China's economy and seeming to de-escalate a looming trade war with the United States. Both positions are to be applauded, but only if Xi follows through.
Xi first claimed to be the world's leading "free trader" in a 2017 speech at Davos, and he has returned to that high ground in every trade speech since. This week, he promised to continue to liberalize China's economy, "significantly open market access" to foreign companies and lower import tariffs on products like cars. Xi said his government would raise the foreign ownership limit in the automobile, shipbuilding and aircraft sectors "as soon as possible" along with measures to open the financial sector. He also promised greater protections for intellectual property — a sore point for China's trade partners.
Policymakers and markets breathed a sigh of relief after the speech, which they interpreted as an attempt to turn down the temperature on the trade dispute with the U.S. They were pleased with his promise to "refrain from seeking dominance and ... refrain from 'beggar thy neighbor' " policies. He urged an ongoing commitment "to openness, connectivity and mutual benefits" as well as "trade and investment liberalization and facilitation, [and to] support the multilateral trading system."