The trade war may be downsized to a skirmish that maybe won’t even be waged.
Or, you could say the other side blinked, a little.
And sometimes blinking eyes mean fewer teary eyes down the road.
In news that stretched into Tuesday morning, Chinese President Xi Jinping said he would take steps to open the country’s economy.
Those steps include lowering tariffs and enforcing intellectual property rights of foreign corporations operating in China. Both matters, of course, are currently at the heart of some of the biggest disputes between China and the United States, with a trade war brewing as each country has fired shots at the other via tariffs.
As has been widely reported, including by CNBC, Xi spoke at the Boao Forum for Asia, saying his country will boost imports in general this year and “work hard” to import products China needs.
“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, via CNBC’s translation of the speech.
As for intellectual property, Xi stated the country will boost efforts to protect such assets.
“We encourage normal technological exchanges and cooperation between Chinese and foreign enterprises [to] protect the lawful [intellectual property] owned by foreign enterprises in China,” he said in the speech.
All of this comes against a backdrop where President Donald Trump has sought to slap another $100 billion in tariffs on products imported from China, this time on top of steel and aluminum tariffs. China has promised a “major response” that would be retaliatory. China’s warning, of course, comes on the heels of tariffs tied to more than 120 U.S. products, among them produce and meat products — to the tune of $3 billion in U.S.-sourced items.
Xi has asked for “dialogue rather than confrontation,” which alone may presage concessions. Automakers may be happy that a cut in that tariff is in the offing (if they do not have factories in China).
The AP reported Xi also made mention of earlier promises to reform the Chinese financial industry — also with an eye on opening those markets to foreign investors. The intention was announced in November of last year, so it seems to cover no new ground.
If the blinking has truly begun, then the 15 percent tariffs China said it would impose may be off the table, meaning the aforementioned $3 billion in goods would be saved from those additional charges, which would, presumably, mean consumer spending (and demand) from China might not be all that disrupted. Similarly, consumer spending here, at least, would keep on chugging — to the hope of many a retailer and the stock market. Perhaps it’s not a bad trade.