In a wide-ranging speech Tuesday, Chinese President Xi Jinping laid out plans for several key areas to make the domestic economy more accessible to foreign businesses.
His remarks at the Boao Forum for Asia alleviated market fears about a U.S.-China trade war and U.S. stocks soared more than 1 percent in the open.
While Xi has addressed these areas of reform previously, Tuesday’s comments contrasted with defensive statements from the Chinese Ministry of Commerce last week in the wake of escalating trade tensions with the U.S.
Here are some of the highlights of Xi’s remarks, and some U.S. industries or companies that may benefit:
“China does not seek [a] trade surplus. We have a genuine desire to increase imports and achieve greater balance of international payments under the current account,” Xi said, according to a translation of the speech. The Chinese president also highlighted the first China International Import Expo, set to take place in Shanghai in November, and said it will be an annual event.
Boosting imports helps Beijing in its years-long effort to transition the country from being a manufacturing base dependent on exports into a consumption-driven economy.
Macquarie’s China economist Larry Hu expects the country could import more medicine, energy and large aircraft.
“Note that China only put smaller planes on its retaliation list to the U.S. but excluded the 747 and other big planes,” Hu said in a Tuesday report.
Beijing will significantly lower tariffs on imports of automobiles, and also loosen restrictions on foreign ownership in the auto sector, Xi said. Less than 24 hours earlier, U.S. President Donald Trump tweeted that China’s 25 percent tariff on U.S.-made cars versus a 2.5 percent tariff on Chinese-made cars in the U.S. was “stupid trade.”
China is a key market for major U.S. automakers, and shares of GM and Ford climbed nearly 2 percent or more Tuesday morning.
General Motors said in January that China was its largest retail market for a sixth-straight year, benefitting from record domestic sales by the Cadillac, Buick and Baojun brands. GM and its joint ventures sold more than 4 million vehicles in China for the first time in 2017, an increase of 4.4 percent.
China will speed up its efforts to open up the insurance industry and ease restrictions on the establishment of foreign financial firms domestically, Xi said. The country will also open up more areas of cooperation between Chinese and foreign financial markets, he said, according to an English-language report from state media.
Xi also reiterated that China will allow greater foreign investment in banking, securities and insurance. “We will ensure that these measures are materialized, he said, according to a translation.
The statements come as China has been slowly opening up its historically closed financial markets to global investors.
Xi said China will step up enforcement of intellectual property rights protection and significantly raise the cost for offenders.
“We encourage normal technological exchanges and cooperation between Chinese and foreign enterprises, and protect the lawful IPR owned by foreign enterprises in China,” he said, according to an English translation by Xinhua state media.
The latest annual survey released in January from the American Chamber of Commerce in China found that more than half of member respondents said they still believe intellectual property leakage and data security threats are higher in China than other parts of the world.
“U.S. industries that could benefit from positive enforcement action by China are aviation, AI/machine learning, sensors, semiconductor manufacturing and design, and perhaps copyrighted software,” said David Pratt, managing director at MCAM International, said in an email. MCAM maintains an archive of documents related to patents and other intangible assets from many countries.
“As China makes advances in artificial intelligence, sensor technologies, aviation manufacturing and semiconductor fabrication among other sectors, its stake in effective IP enforcement has been growing,” Pratt said.