China president Xi offer possible concessions, calms US market
Stocks were rising sharply on Wall Street early Tuesday after Chinese President Xi Jinping offered possible concessions in a trade dispute with the United States.
The Dow Jones industrial average rose as much as 517 points as investors hope the world's largest economies will resolve their differences without a trade war that hampers global commerce. Xi promised to reduce China's tariffs on imported cars and to improve intellectual property protection.
Speaking at a business conference, Xi made no direct mention of the trade dispute with the US, but 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.
He promised progress on areas that are US priorities, including opening China's banking industry and boosting imports, but didn't address key irritants for Washington such as a requirement for foreign companies to work through joint ventures that require them to give technology to potential local competitors.
Private sector analysts saw Xi's speech as an overture to help end the biggest trade dispute since World War II. It has fuelled fears of a global economic chill if other nations respond with their own import barriers.
The Chinese leader promised to encourage "normal technological exchange" and to "protect the lawful ownership rights of foreign enterprises."
"President Xi's speech could create a very good platform to launch US-China dialogue at the WTO to find a deal on intellectual property rights," said economist Rajiv Biswas of IHS Markit in a report. "This would be a victory for the world trading system and an important step away from the abyss of rising global protectionism."
The dispute is likely to end "with a concession from China," said Larry Hu of Macquarie Group in a report.
Also Tuesday, China filed a WTO challenge against Trump's earlier tariff hike on steel and aluminium in a separate dispute.
Beijing, which has issued a US$3 billion list of US goods, including pork and apples for possible retaliation, requested 60 days of consultations as a first step. If that fails, the Chinese government can ask for a ruling from a WTO panel of experts.
Xi repeated pledges to open China's finance industries to foreign investors, first announced last November, but gave no additional details.
The biggest beneficiaries of a cut in China's 25 per cent tariff on most auto imports will be the small number of automakers such as electric car brand Tesla that have no factory in China. Other automakers such as General Motors and Volkswagen that assemble vehicles in China with local partners could offer additional models.
More broadly, Xi repeated official promises to expand imports and to narrow China's trade surplus, another irritant for Washington. China reported a global trade surplus of US$423 billion last year about two-thirds of that with the United States.
"China does not seek a trade surplus," said Xi to an audience of Chinese and foreign businesspeople. "We have a genuine desire to increase imports and achieve a greater balance of international payments."
The president promised to make faster progress towards joining the WTO's Government Procurement Agreement, which extends the WTO's free-trading principles to purchases by governments. That can make a significant difference in developing countries, where the government often accounts for most sales of computer software, medical equipment and other high-value goods.