Xi promises gradual opening of Chinese markets to investment

President Xi Jinping promised more gradual market-opening steps at the start of an import fair Tuesday but no initiatives in technology and other irritants that sparked a tariff war with Washington.

The second China International Import Expo showcases the country’s vast import market of 1.4 billion people to help deflect complaints that it improperly subsidizes industries and shields them from competition. It offers a marketing platform for foreign suppliers of goods from wine to yachts but does less for companies that already are established in China.

“The door that China is opening will only open further and wider,” Xi said in a speech to an audience that included French President Emmanuel Macron and prime ministers of Greece, Jamaica and Serbia.

Xi affirmed promises to reduce restrictions on foreign investment and an offer, first made in June, to accelerate work on a China-Europe investment treaty.

Beijing has announced a flurry of changes over the past two years to make its slowing, state-dominated economy more productive. They include cutting import tariffs and abolishing limits on foreign ownership in auto manufacturing, finance and other fields.

None of the changes addresses U.S., European and other complaints about technology policies and other irritants that prompted President Donald Trump to hike tariffs on Chinese imports, setting off a trade war that threatens to chill global growth.

Xi made no mention of the battle with Washington but called for building and “open and shared world economy.”

Macron expressed concern about the global impact of U.S.-Chinese tension and hope for a prompt settlement.

“The trade war only results in losers,” Macron said in a speech. He expressed hope for settlement that will “safeguard the interests of China’s and the United States’ other major trading partners, starting with the European Union.”

American and Chinese announced what Trump called a “first phase” agreement on Oct. 12 after talks in Washington. Envoys are negotiating the details. The two sides have reported no progress on their biggest disputes and economists say a final settlement is unlikely this year.

In a conference call Tuesday, Commerce Secretary Wilbur Ross said he was “reasonably optimistic” that the Phase 1 talks would be finished. More difficult issues would wait for later rounds, he said.

“We’re hoping Phase 1 will be a precursor of later agreements,” Ross said.

Trump and Xi were due to meet at this month’s gathering of Asia-Pacific leaders in Chile but the event was canceled due to protests there. That dented hopes a meeting might produce progress, but the Chinese government says the two leaders “maintain contact.”

Ross said the two sides were looking for an alternative venue for a meeting.

The European Union is looking for “real, substantial” progress on the investment treaty before an EU-China summit in the second half of 2020, the EU Delegation in Beijing said in a statement.

“We want an ambitious agreement that grants wider market access, robust investment protection, greater predictability for our companies and commitments on sustainability,” the statement said.

Beijing is trying to shore up consumer demand after economic growth sank to a multi-decade low of 6% over a year ago in the latest quarter.

The ruling Communist Party is looking to consumers to propel economic growth, replacing trade and investment. But shoppers are uneasy about the trade war and possible job losses. They are spending less, which has battered sales of autos, real estate and other goods.

Chinese imports were off 5% from a year earlier in the first nine months of the year, down from double-digit growth in previous years. Imports of American soybeans and other goods were off 26.4% following Chinese tariff hikes and orders to importers to find other suppliers.

Business groups welcome greater access to Chinese consumers but express frustration Beijing is removing market restrictions one at a time instead of throwing open its economy 18 years after it joined the free-trading World Trade Organization in 2001.

Many changes are in industries with entrenched Chinese competitors. Newcomers face high minimum capital requirements and other restrictions.

This week’s import fair highlights Beijing’s emphasis on trade in food and manufactured goods, an area dominated by Chinese factories. Its trading partners complain that is antiquated and too narrow. They want more access to finance, health care and other service industries and an end to curbs that block most foreign purchases of Chinese companies and other assets.

Opening services, an American strength, would target “a priority for the U.S. government — reducing the bilateral trade deficit,” said Jake Parker, a vice president of the U.S.-China Business Council, in an email.

Still, American companies were “pleasantly surprised” by commercial opportunities at last year’s Import Expo, said Parker. He said coverage of the event by state television helped companies to promote themselves.

The Shanghai expo also gives Beijing a chance to repair its image as a positive force for development following complaints its multibillion-dollar “Belt and Road” construction initiative leaves host countries in Asia and Africa with too much debt.

Uncertainty caused by trade disputes is the “leading drag” on commerce and investment, said WTO managing director Roberto Azevedo.

“We cannot afford to let this continue,” Azevedo said. He called for a “more stable and more predictable trading system, an international economy with more integration, not less.”