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2018-04-10 | All chapters

Stance on President Xi's Speech at Bo'ao

Background

On 10th April 2018, President Xi Jinping spoke at the Bo’ao Forum opening ceremony. His speech covered a wide variety of topics ranging from geo-political concerns to environmental challenges faced in Asia. The final section of the speech was of most relevance to European business in China. It covered four broad areas aimed at further opening up the Chinese economy to foreign investment:

1.       China will significantly broaden market access.

2.       A more attractive investment and business environment will be created.

3.       IPR protection will be further improved.

4.       Imports will be expanded to address trade imbalances.

Please follow the links below for the full speech.

Chinese text

China Daily video with English translation (speech begins at 19:20)

Stance

Most of the measures announced in President Xi’s speech are old news. Nearly all are reiterations of commitments made as far back as January 2017, during President Xi’s Davos speech. This content has formed the basis of other recent, high-profile government communications, such as the messaging that came from the 19th Party Congress and the Two Sessions, and Liu He’s speech at Davos in January of this year.

Aside from the reference to the development of “free trade ports with Chinese characteristics”, a term which requires definition, the European Chamber recognises  four of the details from the Bo’ao speech as new developments in the discussion surrounding China’s reform agenda:

1)    Revision of the foreign investment negative list will be completed in the first six months of 2018, and pre-establishment national treatment will be applied to foreign enterprises
It was not made clear if this negative list will be applied as soon as the revision has been completed. Furthermore, without knowing if the revisions will reduce the length of the list, it is difficult to evaluate this commitment. A negative list is only as good as it is short. There is also no clear definition of what is meant by ‘pre-establishment national treatment’, or when this would be implemented.

2)    The State Intellectual Property Office will be reorganised
The European Chamber welcomes that part of the broader government restructuring will address issues like IPR protection and fair competition. However, without any details it cannot be determined how this will improve the operations of the office or how it may affect European business in China.

3)    Lower import tariffs will be implemented
President Xi sent an important signal regarding China’s approach to trade – it wants to expand imports and avoid creating trade surpluses. However, the details were limited to a comment that China will eventually lower import tariffs on vehicles and, “some other products.” Again, foreign business is waiting to see more details and results.

4)    China will seek faster progress toward joining the WTO Government Procurement Agreement
China currently holds observer status on the agreement and has been negotiating accession for some time. Given that China committed in 2001 to join the WTO GPA “as soon as possible”, this would be a significant step in the right direction if concluded.

With momentum having built through the previous statements made by President Xi and other top leaders, the Chamber had hoped for announcements of more tangible measures and clear implementation dates.

“The European Chamber recognises President Xi’s continued commitment to greater openness and reform, as well as the pledge to recommit to WTO GPA accession. However, given the significance of this event we had anticipated more tangible reform measures to be announced. It was therefore surprising that Xi’s speech was largely a reiteration of last year’s promises,” said European Chamber President Mats Harborn. “European business is still awaiting concrete reform measures and implementation timelines.”

For more information please contact

Jacob Gunter

June Yu