Within days of US President Donald Trump declaring his intention to impose tariffs on steel imports, Chinese Premier Li Keqian used the opening session of the National People’s Congress in Beijing to promise that China would continue to open up its markets – including the telecoms, health care, education and new-energy vehicle sectors – to foreign investment.
China would additionally be opening up its bank card clearing businesses to foreign competition and remove caps on foreign stakes in banks, securities brokerage houses and fund management firms in an “orderly” fashion, he said, and would be introducing standard market access rules for both domestic and foreign banks. The effects of downward pressure had been negated and financial risk was under control, he added.
Li’s speech also served to underline Beijing’s new-found tolerance for moderate growth rates and to dispel any fears of a hard landing by confirming that the authorities had set a growth target of around 6.5%, marginally down from the 6.9% achieved last year.
Given the furore that has accompanied last week’s impromptu threat of protectionism from the US President, Li’s oratory was laden with symbolism and, although China’s Premier did not make any direct references to Trump, he said China must fight to defend its interests.
Li’s measured approach was in stark contrast to the increasing belligerence of the US president’s reaction to the dismay that his decision to slap tariffs of 25% on imported steel and 10% on imported aluminium has caused. This, as Forbes posted yesterday, will not only have an adverse impact on the US energy sector which relies on imports of both products for the ongoing $1.5trn upgrade of its critical infrastructure, but threatens to trigger an all-out global trade war. On learning that the EU was already preparing retaliatory measures in response to the tariffs, Donald Trump is now threatening to increase taxes on European cars if Brussels goes ahead.
In light of the impulsive nature of Trump’s decision-making, it is probably no more than a coincidence that last week’s announcement came while President’s Xi’s right-hand man Liu He was in the middle of a five-day visit to Washington where he is said to have held “candid and constructive” talks with US Treasury Secretary Steven Mnuchin, during which he was was quoted as saying that it was in the interests of both sides to maintain a stable relationship on trade, which would also benefit the global economy.
But there is no mistaking that Chinese diplomacy conceals a steel of its own; in the same breath as insisting that China does not want a trade war with the US, the government spokesman Zhang Yesui assured delegates that Beijing would not sit by and allow its interests to be hurt.