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Trade

Xi says open to discussion on state-owned companies in CPTPP talks

President also puts industrial subsidies on table to pave way for trade pact

Chinese President Xi Jinping speaks at the opening ceremony of the China International Import Expo in Shanghai on Nov. 4.   © Reuters

SHANGHAI -- President Xi Jinping said Thursday that China is open to negotiations on industrial subsidies and state-owned enterprises in order to be accepted into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

This follows China's application to join the CPTPP in September, a move seen as undermining the role of the U.S. in championing free trade. Washington was the brainchild of the deal -- which includes allies such as Australia, Canada and Japan, as well as eight other countries -- but later decided to pull out.

Speaking via a video link to the China International Import Expo, a six-day trade fair that opens to the public Friday in Shanghai, Xi also vowed to focus more on imports and promote balanced trade development, even as the future of the "phase one" trade deal with the U.S., which expires next month, remains uncertain.

"China will take an active and open attitude in negotiations on issues such as the digital economy, trade and the environment, industrial subsidies and state-owned enterprises," Xi told a gathering of officials and businesspeople. "[This is to] uphold the position of the multilateral trading regime as the main channel for international rules-setting, and safeguard the stability of global industrial and supply chains."

Such an endeavor, Xi continued, is part of China's intention to "firmly promote high-standard opening up."

"China will deeply engage in international cooperation on green and low-carbon development and the digital economy, and work actively for joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership," he added.

Proponents of the CPTPP touted it as a high-level market liberalization, unseen in any other trade deal as the content includes government procurements and intellectual properties. But China's CPTPP application is far from guaranteed as the country's economy is heavily controlled by state-owned enterprises and an increasingly regulated private sector.

Even so, Xi said China will reduce barriers for foreign investment under its negative list, offering to liberalize the telecommunications and health care sectors gradually.

To promote imports and balanced trade development, China will establish more demonstration zones to promote trade innovation and facilitate e-commerce.

Thanks to Beijing's tariff exclusion under the phase one deal with the U.S., American goods exports to China rebounded in 2020, increasing 18% to $123 billion, according to the 2021 District Export Report released by the U.S.-China Business Council this month.

Though officials from both countries met in recent weeks, there have been few signs of an easing of bilateral tensions even though U.S. Trade Representative Katherine Tai recently vowed to achieve a "sober relationship."

"[I]t is unlikely the two sides will make tangible progress on key trade issues, particularly with the U.S. unlikely to signal support for reducing tariffs let alone relaxing technology restrictions in a manner that would spur Beijing towards serious engagement prior to midterm elections next fall," Eurasia Group wrote in a research note on Oct. 30.

Xi's speech comes as China and nine other Asia-Pacific countries will implement the Regional Comprehensive Economic Partnership starting on Jan. 1. The entry into force of the multilateral agreement could promote China's high-level market opening and stabilize its industrial and supply chain, the country's Ministry of Commerce said on Thursday.

The RCEP is seen as a geopolitical win for China, which will likely use its economic might to draw member countries closer by creating an interdependent relationship.

China's annual import expo, in its fourth installment, has been touted by local media as the "most important window to China's market opening." Last year, the expo attracted nearly 400,000 visitors, who signed business deals worth $72.62 billion.

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