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China's President Xi Jinping, left, and U.S. President Donald Trump on the final day of the APEC CEO Summit in Danang, Vietnam, on Nov. 10, 2017.   © Reuters
Economy

Trump and Xi in spat over trade policy

U.S. president hails bilateral deals, Chinese leader defends multilateralism

DANANG, Vietnam -- The leaders of the world's two largest economies on Friday aired starkly contrasting views on international trade at a business leaders' conference ahead of the Asia-Pacific Economic Cooperation summit, due to start on Saturday. Immediately after U.S. President Donald Trump declared he wants bilateral trade deals with every APEC country, Chinese President Xi Jinping countered by re-emphasizing the importance of multilateralism for producing "inclusive" benefits.

Trump harshly criticized subsidies and the practices of state-owned enterprises which are common in China and other emerging economies, saying they were one of the reasons why multilateral trading arrangements, including the World Trade Organization, tended not to function favorably for open market economies like the U.S.

"The United States promoted private enterprise, innovation, and industry. Other countries used government-run industrial planning and state-owned enterprises," Trump said, apparently expressing discontent that state-run Chinese businesses enjoy free access to the U.S. market. "They engaged in product dumping, subsidized goods, currency manipulation, and predatory industrial policies," he added.

The U.S. "lowered or ended tariffs, reduced trade barriers, and allowed foreign goods to flow freely into our country," Trump went on. "But while we lowered market barriers, other countries didn't open their markets to us. Funny."

He blamed previous U.S. administrations for failing to address these issues -- causing "enormous trade deficits" on the U.S. side. He said the U.S. can "no longer tolerate these chronic trade abuses, and we will not tolerate them."

Trump said, nevertheless, that he sought "renewed" and "robust trade relationships" with every Indo-Pacific nation on the principle of "fairness and reciprocity," adding that the current trade imbalance is "unacceptable." He said these deals will be on a bilateral basis, essentially rejecting U.S. participation in any multilateral trade framework.

In contrast, Xi called for "more open, more inclusive ... more equitable growth," and argued that "we should uphold the multilateralism." He said multilateral arrangements will "allow developing states to benefit more from international trade and investment," drawing big applause from the audience, many from China and other emerging economies.

Xi also reiterated his aim to drive the Free Trade Area of the Asia-Pacific (FTAAP) initiative that China has been promoting for over a decade.

He declared his willingness to take leadership in pursuing "sustainable" development agreed at the United Nations and under the Paris Accord on climate change. Xi reminded the audience of Trump's skepticism on global climate change, reiterating China's commitment to achieve a 20% reduction in carbon dioxide emissions by 2020. "Once we have set the target, we don't stop [pursuing the goal]," he declared.

Xi also pushed China's Belt and Road Initiative as the basis for "interconnected development for common prosperity." Xi called for more countries to join, saying: "It does not belong to China, it belongs to the world."

Beijing is offering assistance on infrastructure projects to a number of countries across Asia under the initiative.

Xi said that China is the "main driving force for global growth," and promised to "spend more energy for policy innovation than anything else." He said this included "supply-side structural reforms." He specifically cited capital market liberalization and protection of the rights of foreign businesses.

Trump also called on Asia-Pacific leaders to stand united against North Korea. "The future of this region and its beautiful people must not be held hostage to a dictator's twisted fantasies of violent conquest and nuclear blackmail."

He also seemed to refer to Beijing's extensive territorial claims in the South China Sea, saying that Indo-Pacific nations must not only deal decisively with transnational crimes, but also with "territorial expansion."

Trump's use of the term "Indo-Pacific" reflects the ongoing talks on a partnership between the U.S., India, Japan and Australia on a "free and open Indo-Pacific region."

Trump repeatedly emphasized the importance of "sovereignty" and "independence," in defense of his thinking that prioritizes avoiding getting bound by multilateral schemes. On the other hand, he also repeatedly promoted rule of law, which is often secured globally by multilateral institutions.

Xi's speech was more in line with much of the international consensus that has been developed over recent years.

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