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China seems to have softened its position on the trade practices that have been largely to blame for recent tensions with the U.S., and as such, President Trump seems to have softened his position on things too. He’s gone from calling current relations with the country “stupid trade” to thanking China’s president for his “kind words” on tariffs.
Speaking at the Boao Forum for Asia Tuesday, Chinese President Xi Jingping said that China is entering into a new phase of “opening up.” Xi’s plans for China now include broadening market access, raising foreign equity caps and creating a more attractive investment environment.
“China relied mainly on providing favorable policies for foreign investors in the past, but now we will have to rely more on improving the investment environment,” Xi said according to a translation of the speech on CNBC TV.
For the U.S.—and Trump in particular—what Xi said next was perhaps the most poignant.
“We will strengthen protection of intellectual property rights, or IPR. This is the centerpiece of the system for improving property rights protection, and it will also provide the biggest boost to enhancing the competitiveness of the Chinese economy,” Xi said.
Concerns over China’s intellectual property practices have been largely the focus for Trump’s tariff targets, and as such, the U.S. president appeared pleased to hear the news.
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“Very thankful for President Xi of China’s kind words on tariffs and automobile barriers…also, his enlightenment on intellectual property and technology transfers. We will make great progress together!” Trump tweeted Tuesday.
The tweet was a departure from one posted a day prior: “When a car is sent to the United States from China, there is a tariff to be paid of 2 ½%. When a car is sent to China from the United States, there is a Tariff to be paid of 25%. Does that sound like free or fair trade. No, it sounds like STUPID TRADE – going on for years!” Trump said Monday.
Xi’s seemingly reconsidered stance comes amid escalating tensions between the two nations, which have been locked in a tariff standoff. The latest occurrence in the battle was Trump’s suggestion of another $100 billion in tariffs against China tied to its “illicit” practices of forcing U.S. companies looking to do business there to transfer sensitive data and intellectual property. Before that, China outlined $50 billion worth of tariffs on U.S. goods including cotton. Before that, the U.S. detailed 1,300 products from China that would face new tariffs. Before that, China levied tariffs on 128 U.S. products including apparel manufacturing machinery in response to U.S. steel tariffs. Before that, the U.S. instituted steel tariffs that would see imports from China facing a new 25 percent charge.
The back-and-forth has sent markets roiling, sent stocks into a tizzy and kept apparel brands and manufacturers on edge as they wait to see how things will take shape.
Things may be set to quiet down, however, as Xi seemed firm about China’s plans, promising to take action in short order.
“This year, we are reinstituting the State Intellectual Property Office to strengthen the ranks of its officers, step up law enforcement, significantly raise the cost for offenders and fully unlock the deterrent effect of relevant laws,” Xi said on CNBC. “We encourage normal technological exchanges under cooperation between Chinese and foreign enterprises and protect the lawful IPR owned by foreign enterprises in China.”
Though Xi didn’t specifically address the two recent lists of tariffs on U.S. goods and what would become of those, he did say rates for autos would be cut, which could signal more reductions to come.
“China does not seek trade surplus. We have a genuine desire to increase imports and achieve greater balance of international payments under the current account,” Xi said. “This year we will significantly lower the import tariff for vehicles and also reduce import tariffs for some other products.”