CIIE to boost confidence in economic globalization

By Wen Sheng Source:Global Times Published: 2018/11/6 22:18:40

Illustration: Xia Qing/GT

More than 3,000 companies from over 130 countries are exhibiting their products and technologies at the debut China International Import Expo (CIIE) being held in Shanghai. Speaking to an audience of many foreign government leaders, Chinese President Xi Jinping reaffirmed the country's steadfast adherence to reform and opening-up as the only path to high-quality development of China's economy.

The endorsement of wider opening-up by China is of international importance. The CIIE will be a major initiative and powerful force to proactively open up China's huge market to the world, and make the country more integrated with the global community.

The event being held in China's most developed financial hub demonstrates the Chinese leadership's determination to stick to multilateralism and economic globalization when the free trade system is under attack, protectionism is on the rise, and the seeds of economic instability and uncertainty are being planted.

The import expo will serve as a platform to inspire cooperation in international free trade in unprecedented depth and width. China expects to import $30 trillion worth of goods and $10 trillion worth of services in the coming 15 years, said Xi. Last year, China's total imports rose 15.9 percent to hit $1.8 trillion.

To make China's motives crystal clear, the top leadership made good on a pledge by cutting import tariffs on more than 1,500 industrial goods as of November 1, which brought the country's overall tariff rate down to 7.8 percent, a lower-middle level by international standards. The country plans to further open up its financial services sector, having already lifted curbs on foreign ownership of vehicle producers.

In addition, the government has decided to make all of South China's Hainan Province into a free trade zone, an unprecedented move in reform and opening-up. Everyone knows that China's resolve to promote market-oriented reform and global free trade has never been stronger than now.

In sharp contrast, the world's largest economy under US President Donald Trump has chosen the opposite road of protectionism and isolationism. The higher steel and aluminum tariffs levied on nearly all of its trading partners and the escalating trade war it launched against China, have succeeded in throttling global supply chains and making multinational companies jittery. Many are increasingly worried about economic growth.

China's market is promising. Boosted by the ever-growing middle class, estimated at more than 400 million, the country is poised to become the world's top consumption market. Among a wide variety of foreign-made quality goods, German and Japanese cars, Russian energy, French cosmetics, Swiss timepieces, and grain, meat and fruit from Southeast Asia, Africa and Latin America have been welcomed by Chinese consumers.

The Shanghai expo will act as a demonstration before billions of global observers that China is letting the market play the decisive role in its business operations. Trade is typically market-driven and the government's role is significantly limited, so China's imports and exports are driven largely by market supply and demand.

During the Shanghai import fair, exhibitors from all over the world are expected to directly engage with Chinese buyers and ordinary consumers, and share the development dividends of this massive market. The event will also help expand domestic demand and upgrade consumption, and create a window of opportunity for Chinese manufacturers to transform, innovate and optimize.

Nevertheless, a group of conservative politicians in Washington are intent on decoupling the US from China economically, by intensifying the trade spat and broadening tariffs on Chinese goods. The hawks emphasize that the US was the predominant economic power for many years, even before China initiated its reform and opening-up policy in 1978.

However, this static analogy is untenable. The idea that cutting trade and investment bonds with the world's second-largest economy will not backfire on the US sounds very naïve, if not ignorant.

The impact of the trade war is producing a double whammy for the US economy: Trump's high tariffs on Chinese goods are disrupting the supply chains of many American factories and hurting their bottom lines. Meanwhile, China's tit-for-tat retaliatory tariffs have shut the door on exports of US agricultural products, cars, planes and energy, with the market gaps being made up by other trading partners of China.

Forty years into an impressive process of reform and opening-up, China has a huge domestic consumption market and a complete industrial system, with strong innovation momentum and economic resilience. Both China and the US benefit from cooperation and suffer from confrontation.

As more than 180 US-based multinational companies showed up at the Shanghai import expo, the CIIE should awaken US politicians bent on pressuring China to rethink their economic policies.

The author is an editor with the Global Times.


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