China Seeks Allies as Trump’s Trade War Mounts11/05/2018
Faced with mounting American tariffs that could slow China’s already weakened economy, President Xi Jinping is pressing the case to the rest of the world that China can be a positive force for global trade.
The challenge will be convincing the world he means it.
Mr. Xi, the country’s top leader, on Monday kicked off a six-day expo intended to show China as a big buyer of foreign goods. He extolled China’s appetite for what the rest of the world makes, and he reiterated promises that Beijing would lower import tariffs and improve intellectual property protection to help make that happen.
“Openness has become a trademark of China,” Mr. Xi said. “China has grown by embracing the world, and the world has also benefited by China’s opening up.”
“Today, as economic globalization deepens and develops,” he added, “the ideas of the law of the jungle and winner take all increasingly lead to a dead end.”
Mr. Xi’s import expo is expected to bring 150,000 Chinese buyers to Shanghai this week to a vast exhibition center with more than five times the exhibition space of the Jacob K. Javits Convention Center in New York to peruse imports offered by businesses from 130 countries. It was intended to show that China offers more to the world than its vast manufacturing sector, which has flooded the world with goods and prompted leaders in the United States and elsewhere to worry about their own domestic industries.
China’s challenge was on display, as well, particularly when considering who skipped the event. Despite months of energetic efforts by China to persuade foreign leaders to attend, only about a dozen presidents and prime ministers — from Hungary, the Dominican Republic and El Salvador, among others — showed up Monday morning. Many were leaders of countries like Kenya and Laos that have borrowed heavily from Beijing as part of Mr. Xi’s Belt and Road Initiative, which is lending money for infrastructure projects across Asia, Eastern Europe and East Africa.
Notably absent were the leaders of major trading nations like Germany, Britain, South Korea and Japan. The United States did not send an official delegation at all.
Even some who attended struck a discordant note. Speaking on Monday morning in Shanghai, President Uhuru Kenyatta of Kenya said that his country’s trade with China has grown eightfold in the past decade. “This trade, however, was heavily skewed in favor of China,” he said.
Even while seeking a trade deal with Washington, Beijing has increasingly tried to appeal to the rest of the world, both for political support in the clash with the United States and to make sure China has more places to sell its products. Illustrating that effort, Mr. Xi met recently with Shinzo Abe, Japan’s prime minister, in a move widely seen as a signal that President Trump’s tough trade stance against Japan and China could bring the two regional rivals closer together.
Governments in Europe and East Asia have found themselves increasingly caught in the middle of the trade war between Washington and Beijing. Mr. Trump is deeply unpopular among the public in many countries, particularly in Western Europe, making it politically difficult for leaders there to support him in the trade dispute.
But many European and East Asian leaders have complaints similar to Mr. Trump’s. They say China discriminates against foreign companies doing business here and unfairly supports local companies. Some have begun to favor taking a similarly aggressive stance against China.
Adam Dunnett, the secretary general of the European Union Chamber of Commerce in China, said that in the past few months some European companies had begun to favor a tougher, American-style position. They want restrictions on Chinese exports to Europe unless Beijing provides the same access to its markets for European companies that Europe has long provided for Chinese companies.
“This is a fundamental change,” he said. “The fact that we’ve got members talking that way is a real concern.”
Mr. Dunnett declined to identify the companies and added that the chamber of commerce had not shifted its own position. The chamber has long called for greater openness of China’s markets without endorsing threats of tariffs or other measures on Chinese exports to Europe.
Some European business leaders have begun echoing American complaints that China was allowed into the World Trade Organization in 2001 without enough rules to force it to become more of a market-based economy.
“We decided to open the door to China probably in a little bit naïve way,” said Patrick Pouyanné, the chairman and chief executive of Total, the French energy giant.
The shift in business attitudes has coincided with a shift in Trump administration policies in recent months toward rallying other countries to oppose Chinese trade policies, and away from unilateralism.
The United States imposed tariffs on steel and aluminum importsearlier this year on a long list of countries that included many allies, pushed to overhaul the North American Free Trade Agreement and threatened tariffs on imports of European cars.
But Robert E. Lighthizer, the United States trade representative, has spent the past few months focusing on China while mending fences with European and East Asian nations and seeking bilateral free trade deals with a growing number of them.
The effort has potential appeal for American allies. The trade ministers of the European Union, Japan and the United States issued a joint statement in late September that denounced forced technology transfers, industrial subsidies and government-backed efforts to turn state-owned enterprises into national champions. The statement clearly referred to China, although it was not mentioned by name.
China is looking to resolve the trade war before it further damages the country’s slowing economy. Growth has been hurt by debt worries and declining business and consumer confidence.
Mr. Xi on Monday emphasized that China had opened up more sectors this year to foreign investment. Big companies like B.A.S.F., the German chemical giant, and Exxon Mobil, the oil and gas company, have made use of the opportunity to rush in and sign deals in recent months. In a nod to one major concern among foreign companies, he also said China would strengthen intellectual property protections so that firms would worry less about theft and copycats.
China will “put in place a punitive, comprehensive system to significantly raise the cost for offenders,” Mr. Xi said Monday, without providing a timetable or details.
China’s imports have indeed been climbing in recent months. Its trade surplus with the rest of the world has shrunk when compared to the size of the country’s economy, Christine Lagarde, the managing director of the International Monetary Fund, noted in a brief speech on Monday. But much of that comes from importing commodities, not importing the kinds of manufactured goods that can lead to factory jobs abroad.
That is not to say the world is on the side of the United States. American trading partners continue to warn that Mr. Trump’s unilateral moves to impose tariffs and rip up trade agreements could upset the global economic order. That bothers American trading partners, in particular moves by the United States that fall outside the World Trade Organization, the global accord that sets many of the rules of global commerce.
“What we are worried about is this unilateral approach,” Valdis Dombrovskis, the European Commission vice president for the euro and social dialogue, said in a recent interview. “We think trade should be dealt with in a multilateral framework.”