Xi vows to further open China economy as US trade spat simmers

China's President Xi Jinping's speech comes a fears grow about a possible trade war with the United States

Chinese President Xi Jinping pledged on Tuesday to lower car tariffs this year and take other steps to open the world's number two economy "wider and wider", addressing major complaints by the United States in a simmering trade row. Xi's remarks follow weeks of tit-for-tat tariffs and mutual threats of more levies on hundreds of billions of dollars worth of products between Beijing and Washington that have raised fears of a trade war that could lacerate the global economy. While he did not directly mention US President Donald Trump's trade demands, Xi told an economic forum on the southern island of Hainan that Beijing "does not seek a trade surplus" and hopes to increase imports. Xi also used the speech to address global security and development, saying that "Cold War mentality and zero-sum games are becoming increasingly obsolete and outdated." Promising a "new phase of opening up", he said China will "considerably lower" tariffs on cars and other products this year, take measures to liberalise automobile investment, and protect intellectual property -- all areas that have been high on the list of demands by Washington. "Economic globalisation is an irreversible trend of the time," Xi told the Boao Forum for Asia. "The door of China's opening up will not close, it will only open wider and wider." But he gave few details nor an exact date for implementing the measures, which were mostly recycled from previous pledges. The car tariffs were the target of a Trump tweet Monday, saying China charges much higher levies than the United States: "Does that sound like free or fair trade. No, it sounds like STUPID TRADE -- going on for years!" Xi's speech buoyed world markets, with Asian stocks closing higher and European shares up at the opening after being hammered by the trade row in recent weeks. "Asian markets are happy, US and European markets are likely to be happy too," said Christopher Balding, a Peking University economics professor. "The tone was conciliatory but Washington is bargaining for action, not promises." Christine Lagarde, managing director of the International Monetary Fund, congratulated the Chinese leader on his commitment to openness. The measures he laid out such as "removing caps, reducing barriers" were "very specific," she told the Boao Forum, which drew global leaders to Hainan this week. - Musk requests help - Beijing's restrictions on foreign ownership in the auto sector have forced foreign companies to partner with Chinese firms and share their technology. Elon Musk, CEO of electric car giant Tesla asked for Trump's help on the issue this year, alluding to the troubles his firm has faced producing in China. Xi said those restrictions would be liberalised, pledging "to quickly relax restrictions on foreign shareholding, especially the restrictions on foreign investment in the automobile industry". The threatened tariff war was spurred by a US Trade Representative investigation into China's intellectual property practices, which alleged wide-scale theft and forced technology transfers. Xi pledged specific measures to address concerns on IP protection. "This year, we will reorganise the State Intellectual Property Office to strengthen law enforcement," he told the forum. Pledges on autos and IP were accompanied by a promise to push through reforms in the financial services industry, which would open up to more foreign participation -- reforms first announced last year. - On the brink - But Chinese officials have promised many of the measures in the past with little action -- Washington says it has grown tired of China's unfulfilled pledges. "This could provide Trump with an opportunity to back down from his tariff threats while claiming a victory of sorts," said Julian Evans-Pritchard, analyst at Capital Economics. "In practice, however, there was little in Xi's speech that we haven't heard before and nothing that would address broader US concerns over China's trade practices." Fed up, the United States has slapped tariffs on imports of steel and aluminium, followed by planned levies on $50 billion worth of goods from China over Washington IP theft allegations. China retaliated by unveiling planned levies on $50 billion worth of major US exports, including soybeans, cars and aircraft. Beijing has also requested dispute consultations at the World Trade Organization over US steel and aluminium tariffs. Trump has also threatened to impose more tariffs on $100 billion worth of Chinese goods, prompting Beijing to warn that it would punch back with great strength. But Trump suggested on Sunday that he saw an end to the dispute, saying on Twitter that he will "always be friends" with Xi and that "China will take down its trade barriers because it is the right thing to do." On Monday, however, China's foreign ministry warned that trade talks with the United States were "impossible" under current conditions.