BY PUJAB RAJ PRADHAN
As the U.S. and China inch closer to a full-fledged trade war, this year’s annual Boao Forum for Asia, themed “An Open and Innovative Asia for a World of Greater Prosperity” concluded yesterday. Together with providing Chinese President Xi Jinping the first show after having his ideas mentioned by name in the constitution and avenging Trump in person via a keynote speech at the opening ceremony of this year’s conference. The four day event, Asia’s equivalent of the World Economic Forum, was held on the tropical island of Hainan known as China’s Hawaii; moreover, it might as well be more than a match considering the strategic location and the aptitude of the island.
During his keynote speech on Tuesday regarded as the most authoritative interpretation, Xi vowed to open sectors from banking to auto manufacturing and also warned against returning to a Cold War mentality. Only by adhering to peaceful development and working together can we truly achieve win-win results, Xi said. He further added, humanity has a major choice to make between openness and isolation, and between progress and retrogression also promising to open the country’s economy further and lower import tariffs on products including cars. Xi also defended his ambitious multi-billion dollar Belt and Road Initiative, affirming China has no geopolitical calculations and the project will benefit the world.
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 told hundreds of investors gathered on the resort island of Hainan. He also assured that China is a safe and reliable partner while implying the U.S. is not, though he did not mention it by name. We also live at a time with an overwhelming trend toward reform and innovation, adding that those who reject them will be left behind and assigned to the dustbin of history; he added. He also announced that an International Import Expo would be held in Shanghai in November to open up the Chinese market.
Amidst a chauvinistic tone, Xi didn’t forget to praise Chinese people for transforming the country into world’s second largest economy after the U.S. Today, the Chinese people can say with great pride that reform and opening-up, China’s second revolution if you like, has not only profoundly changed the country but also greatly influenced the whole world, he said. China began its historic journey of reform and opening-up in 1978, and the Chinese people have added a glorious chapter to the development epic of the country and the nation over the past four decades, Xi noted proudly.
Xi also promised to strengthen protection of intellectual property rights (IPR), a major demand by U.S. and the west as China is accused of stealing the technology of international investors. The pledges were not new but could be seen as an attempt by China to defuse a deepening conflict over trade with the U.S. He expressed hope that developed countries will stop imposing restrictions on normal and reasonable trade of high-tech products and relax export controls on such trade with China. Given the Optimism that negotiations between the U.S. and China over recent trade friction has taken a hit and investors are getting impatient.
At a time when the U.S. has been disassociating on free trade and escalating the trade war by slapping unprecedented tariffs on more and more goods, WTO distinctly seems to be losing its name of the game. Despite the Chinese wisdom of harmony and co-existence, China could always retaliate in a far more sententious move by selling huge portion of the $1.17 trillion of the U.S. treasury bonds it holds and create a ripple effect on international markets while pushing the U.S. economy to slow down. Except, China is positively aware that such behavior would have a negative impact on its own financial pursuit and any decline in U.S. dollar would make the U.S. exports more attractive, harming China’s own export market the most. In kind, China could always devalue its own currency, which would then make exports even more attractive and increase the trade deficit and exasperate Trump further.
The Boao Forum gathers importance as a platform to reinforce the commitment towards free and rule-based trading. A large number of Chinese funded projects are not only advancing in more than 80 countries under the BRI framework, but another dais conscripted by China, the Asian Infrastructure Investment Bank (AIIB), has also been arising as a major source of investment in Asia and outside. According to China’s Ministry of Commerce, Chinese enterprises made 14.36 billion U.S. dollars of non-financial direct investment in 59 countries along the Belt and Road in 2017 and the AIIB funded more than 20 sustainable infrastructure and other productive projects in the past two years.
[The author is an executive member of the Nepal-China Cultural Economic Journalists and Intellectuals’ Society (NCCEJIS)]