China renews pledges on open economy, tariff cutting - Reuters

As reported by Reuters, China's Xi Jinping renewed his promises to cut tariffs and open up China's economy further, but as Reuters notes there may be some strings attached to the Chinese President's words.

Key quotes (source: Reuters)

Chinese President Xi Jinping on Tuesday promised to open the country’s economy further and lower import tariffs on products including cars, in a speech seen as conciliatory amid rising trade tensions between China and the United States.

While most of the pledges were reiterations of previously announced measures, Xi’s comments sent U.S. stock futures, the dollar and Asian shares higher.

Xi said China would raise the foreign ownership limit in the automobile sector “as soon as possible” and push previously announced measures to open the financial sector.

“This year, we will considerably reduce auto import tariffs, and at the same time reduce import tariffs on some other products,” Xi said. He also said “Cold War mentality” and isolationism would “hit brick walls”. Chinese officials have been promising since at least 2013 to ease restrictions on foreign joint ventures in the auto industry, which would allow foreign companies to take a majority stake.

Jonas Short, head of Beijing office at Everbright Sun Hung Kai said the market reacted positively to Xi’s speech because it saw it as an easing of trade tensions, but voiced caution about the likely extent of such reforms. “China is opening sectors where they already have a distinct advantage, or a stranglehold over the sector,” Short said, citing China’s banking industry, which is dominated by domestic players.

Beijing charges that Washington is the aggressor and spurring global protectionism, although China’s trading partners have complained for years that it abuses World Trade Organization rules and practices unfair industrial policies that lock foreign companies out of crucial sectors with the intent of creating domestic champions.

While China has recently expressed optimism that the two sides would hammer out a trade deal, Chinese officials in recent days have said negotiations would be impossible under “current circumstances”.