At Boao, Xi Jinping shows the world a grown-up China amid trade war threats
Richard Harris says instead of engaging Donald Trump in a battle of one-upmanship, the Chinese leader demonstrated statesmanship by promising to further open up China’s economy, in the interests of trade and globalisation
Boao, in Hainan, is about as far away climatically from Davos, in Switzerland, as you can get. Moving from cold and crisp to hot and sticky is a big step for regular economic conference groupies and, despite superficial similarities, the meetings are very different, too.
This is an important turning point. It is now 40 years since China opened up as a very poor developing economy, when other nations were prepared to give the country a huge amount of slack. Hundreds of millions of people spent two generations working to get out of poverty. China is now a major developed economy of global stature. Xi is perhaps the first president to recognise that China is way past being a developing teenager and now has to act its age on the world stage.
The size of the economy means that China is now not only a major economic trading partner but also an opponent and indeed adversary in world trade. The country can no longer demand a free ride. Yet barriers to imports and foreigners, more akin to a developing country, still exist.
Xi the statesman is also Xi the pragmatist – for China is at a serious disadvantage to the US in a trade skirmish. As of December last year, according to US census data, 25 per cent of China’s exports go to the US (that’s 6 per cent of China’s gross domestic product); the US exports only 5 per cent to China (0.6 per cent of GDP).
America can still say talk is cheap – and reform takes a long time. There will be a period where Trump will have to trust, and verify. If Xi is able to open up the economy as dramatically as Deng Xiaoping did 40 years ago, by putting aside the concept of face, he will be close to grasping the cloak of global statesmanship.
Richard Harris is a veteran investment manager, banker, writer and broadcaster and financial expert witness. www.portshelter.com