With further opening up of its market, China expects the total value of its imported goods and services to jump 20 folds to US40 trilllion in the next 15 years.
CHINA demonstrated its commitment to become a giant buyer of global goods when it went ahead last week to host the world’s first import expo despite being drawn into an intense trade war with the United States.
To welcome 400,000 buyers from all over China, foreign businessmen, international leaders, Shanghai lit up its buildings on Sunday night. Roads were shut down and schools closed for two days.
China’s resolve to boost the import element in its economy will not only help China correct its trade imbalance with major trading partners but it will also create more trade and investment opportunities for the mainland and the world, according to world leaders.
Having succeeded in becoming the “world’s factory” and benefited from vast exports and foreign direct investment (FDI) for over two decades, the world’s second largest economy is signalling that it is ready to open up its market wider to purchase high technology, quality goods and services.
The six-day China International Import Expo (CIIE) from Nov 5-10, with over 1,800 exhibition booths, consumed about 17 months for preparation and organisation.
The expo, to be an annual event, was a follow-up from the pledge made by Chinese President Xi Jinping at the Belt and Road Summit in Beijing in May 2017.
“CIIE was held as scheduled and with meticulous organisation. This reflects China’s resolution to open wider, regardless of changes in the international situation,” said an editorial by the official news portal Global Times.
“When facing the pressure of a trade war, whether to close the door or persist in opening-up is a comprehensive test for China… As long as China follows the right path, it can deal with whatever difficulties happen,” the editorial added.
The expo, touted as the first import-centric event in the world, has attracted more than 3,600 companies from 172 countries and regions to showcase their strong services and quality products.
A total of 11 countries – Indonesia, Vietnam, Pakistan, South Africa, Egypt, Russia, Britain, Hungary, Germany, Canada, Brazil and Mexico – attended the expo as guest countries of honour.
International Trade and Investment Minister Darell Leiking was a guest of honour.
President Xi, in his keynote address at the opening ceremony of CIIE, said the event “is a major policy for China to push for a new round of high-level opening-up and a major measure for China to take the initiative to open its market to the world.”
He pledged that China “will take further steps to lower tariffs, facilitate customs clearance, reduce import costs, and step up cross-border e-commerce and other new businesses.”
China has cut import tariffs on more than 1,500 industrial goods as of Nov 1, bringing the country’s overall tariff rate down to 7.8%.
Xi projected that in the next 15 years, China’s imported goods and services could jump many folds to exceed US$30 trillion and US$10 trillion respectively.
Last year, China’s total imports stood at US$1.84 trillion, representing 11.5% of total global imports. Its exports last year totaled US$2.26 trillion.
Topping the list of China’s imports in 2017 were electrical machinery and equipment (US$455.5 billion or 24.7% of total imports), mineral fuels and oil (US$247.6 billion or 13.4%), machinery and computers (US$169.8 billion or 9.2%).
For the past nine consecutive years, China has been the world’s second largest merchandise importer.
World Trade Organisation (WTO) director-general Roberto Azevedo, in his speech, said: “The CIIE sends out a clear message about China’s growing role in global trade, and reminds us that trade is not a zero-sum game, where exports are good and imports are bad.”
IMF managing director Christine Lagarde said China has helped transform the global economy as the progress in China has played a significant role in boosting productivity, innovation and raising the living standards of countries around the globe.
She agrees with China’s move in rebalancing its economy towards consumption-led growth, rather than focussing only on exports and investment.
“This transition, symbolized by the CIIE, is good for China, especially in terms of the rising standards of living for the Chinese. It is also good for the world, including all those who consider China as a vital and vibrant market,” said the IMF chief.
China first opened up to the world 40 years ago under the leadership of reformist Deng Xiaping. Further liberalisations and reforms under subsequent leaders have led the Middle Kingdom to achieve greater heights.
According to the projection by HSBC, China will overtake the U.S. to become the world’s largest economy by 2030.
As expected, the expo saw many huge purchasing orders signed by China’s state corporations and private companies.
Last Tuesday, China’s Assets Supervision and Administration Commission announced that 13 of China’s state-owned enterprises have signed multi-billion deals with large foreign businesses on imports, services and technology projects.
These companies included Volkswagen, Westinghouse Electric, robotics and power grid company ABB, Carnival, Rolls-Royce and Standard Chartered.
Volkswagen told CNBC it had signed a memorandum of cooperation with its Chinese joint venture under which the Asian arm will import parts and vehicles worth a total of about 62 billion yuan (US$8.9 billion).
Global Times reported that China National Machinery Industry Corp has signed 21 import purchasing contracts worth US$8.1 billion, with companies from 16 countries that included the US and India.
Sinochem Group has also signed purchase contracts worth more than US$11.3 billion with 17 companies. The products included high-quality fertilizer and high-end chemicals.
On Thursday, Suning Holdings Group – the commercial giant ranked second among the top 500 non-state-owned enterprises in China -- announced that its global procurement has hit almost 15 billion euros.
In a commentary, official media Xinhua News said: “In a time when protectionism and unilateralism threaten global growth, a more accessible Chinese market with over 1.3 billion people brings certainty and hope to the world economy.”
It noted that Xi had said in his speech: “China’s initiative to expand imports is not a choice made from expediency. It is a future-oriented step taken to embrace the world and promote common development.”
Xinhua pointed out that China’s commitment to ease its market access had started in June.
In June, China shortened the “negative list” for foreign investment, cutting the number of items to 48 from 63, removing investment access restrictions in banking, securities, construction of power grids and railways.
In response to these liberalisations, oil and gas group ExxonMobil, carmaker Tesla and portfolio management firm Bridgewater have set up new 100%-owned projects in China.
As a result, FDI into China rose last month. The October report of the United Nations Conference on Trade and Development revealed that FDI flowing into China grew 6.0% to US$70 billion in the first half of 2018, in contrast to the 41% plunge in global FDI during the same period, according to Xinhua.
“A higher level opening-up is a must for China, with the world’s biggest middle-income population demanding high-quality consumer products,” Xinhua said.
China’s middle-income group is estimated to be 500 million. The Economic Intelligence Unit (EIU) of London has forecast China will become a middle-income society by 2030.
China’s consumption has historically centered on essential items such as food, beverages, clothing and footwear.
But as average disposable income increases, higher spending is expected to be on cars, luxury goods, tourism, financial services, beauty products, sports and healthcare.
In his keynote address, Xi also addressed concerns on the Chinese economy that has been hit by the intense trade war started by the United States in recent months.
“There is every reason to be fully confident in the future of the Chinese economy. China’s economy remains generally stable and is making good progress,” Xi assured the expo participants on Monday.
China’s GDP grew at 6.7% in the first three quarters of this year, although the third quarter saw a slower growth.
The fundamentals for sound and stable economic growth remain unchanged, the production factors for high-quality development remain unchanged, and the overall momentum for long-term economic progress also remains unchanged, Xi added.
One message from Xi to his own subjects and the world is: Trade war or not, China will not stop opening up and will not stop pursuing an open global economy.
To instil investor confidence on China’s economy, Xi in his Mandarin speech likened the China’s economy as a vast ocean that could overcome all forms of challenges:
“The Chinese economy is an ocean, not a pond. Strong winds and storms may upset a pool, but never an ocean. After experiencing a series of tempests, the ocean is still there. After going through 5,000 years of pains and hardships, China is still here. Looking ahead, China will be here forever to stay.”
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