Caixin
Jan 17, 2017 08:27 PM
ECONOMY

President Xi Underscores China's Support of Global Economy

(Davos) — President Xi Jinping emphasized China’s commitment to an open economy and blasted the resurgence of anti-globalization during his keynote speech Tuesday at the opening ceremony of the World Economic Forum in Davos, Switzerland.

"We must remain committed to free trade and investment. We must promote trade and investment liberalization," Xi said before a group of global political and business leaders at the annual conclave in the Swiss Alpine resort. "No one will emerge as a winner in a trade war."

“It’s impossible to attempt to cut off the flow of capital, technology, products and personnel,” Xi said. “It’s also against the historical current to attempt to make the sea of the world economy revert to isolated lakes and creeks.”

The gathering comes as globalization faces intensifying headwinds amid rising populism and trade protectionism, underscored by last year’s Brexit vote in Britain and Donald Trump’s election as U.S. president.

Xi’s appearance at Davos was the first by a top Chinese leader. He took a strong stance in favor of global trade as the world attempts to assess the impact of a more inward-looking, protective U.S. The American president-elect, who will be inaugurated Friday, has vowed to withdraw from the unratified Trans-Pacific Partnership and renegotiate the 23-year-old North American Free Trade Agreement.

“It is not true to blame economic globalization for problems that are troubling the world. It won’t help resolve the problems,” Xi said. "Rather, we should adapt to and guide economic globalization, cushion its negative impacts and deliver its benefits for all countries."

In the past, China was suspicious of globalization and hesitated to join the World Trade Organization before doing so in late 2001, Xi said. But China decided to “learn to swim in the sea of world markets,” he said. “This is our right strategic decision.”

In a speech that lasted almost an hour, the Chinese president criticized anti-globalization rhetoric.

"Pursuing protectionism is just like locking one's self in a dark room,” Xi said. “While wind and rain may be kept outside, so are light and air.”

Xi also underscored China's commitment to fighting climate change and emphasized that “all signatories should stick to” the Paris accord, which Trump favors abandoning.

In the face of the rising uncertainty about Europe and the U.S., the world is looking for clues about what course China plans to chart on economic globalization. Xi’s speech was seen as a strong gesture that China is taking up the baton to defend globalization.

“It's very positive,” said Carl Bildt, former prime minister and foreign minister of Sweden. “I think it's revealing that China is promoting open trade and combating climate change. We are in a volatile world. We hope everyone may refrain from changing populist rhetoric into actions.”

Xi’s speech “touched on quite a few of the stakeholders’ interests, such as the environment, the underprivileged, and the fact that China develops on its own track,” said Victor Chu, chairman of First Eastern Investment Group.

“It provides impetus for stability in an uncertain and unpredictable atmosphere,” said Chu, who is attending the Davos meetings for the 23rd year. “So having him here to commit to and cheerlead for economic globalization and commit that China will open inclusively and fairly is very important.”

Xi also said China’s economy grew 6.7% last year, within the targeted range of 6.5%-7%. The world’s second-largest economy has been expanding steadily, although at a slower pace than in recent years. Xi also reaffirmed that China won’t purposely devalue its currency to help exports and engage in a currency war.

China’s economy has been under pressure from mounting debt and excess liquidity, which can fuel bubbles in financial and property markets. This comes at a time of weak internal demand as Beijing is struggling to boost investment and rein in capital outflows. China’s foreign exchange reserves fell to $3.01 trillion at the end of last year from a record-high $3.8 trillion in 2014 as the central bank sold dollars to keep the yuan’s value stable. The yuan declined nearly 7% against U.S. dollar last year.

Xi pledged China’s commitment to economic opening, saying that over the next five years, the country will import $8 trillion of goods and invite $600 billion in foreign investments while making $750 billion in outbound investments. He also emphasized the progress of his signature “One Belt, One Road” initiative, designed to strengthen China’s economic ties with countries in Asia and Europe. Chinese companies have invested more than $50 billion yuan in countries involved the initiative, Xi said.

On the same day as Xi’s speech, China’s State Council, the cabinet, announced that it would further open sectors including financial services, mining and manufacturing to foreign investments.

Xi’s attendance at Davos is part of a state visit to Switzerland that began Sunday and ends Wednesday. He has met with Swiss President Doris Leuthard and Swiss business executives in Bern, discussing closer cooperation between the two countries.

During the trip, Xi will also visit the United Nations office at Geneva, the World Health Organization in Geneva and the International Olympic Committee in Lausanne.

Contact reporter Han Wei (weihan@caixin.com)

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