President Xi Jinping announced on Tuesday that China will begin a “new phase of opening up” that will shift the Chinese economy towards a market-based model. While it is not the first time the Chinese President has made these or similar promises, the remarks clearly are designed to forestall threatened U.S. tariffs and reduce trade tension with the United States.
The promised reforms include strengthening protections for intellectual property, increasing foreign access to financial and manufacturing sectors of the Chinese economy, and lowering tariffs on vehicles and other goods.
President Xi addressed the automobile industry by promising to eventually reduce ownership restrictions for foreign car makers and to lower tariffs on foreign vehicles. The U.S. automobile industry currently faces relatively high tariffs when shipping to China. While on its face the announcement Tuesday appears positive for U.S. auto manufacturers, President Xi noted that the trade reforms would only be available to those countries that do not “violate” rules established by the WTO. Given that China formally challenged the U.S. in the WTO on Tuesday regarding steel and aluminum tariffs, the availability of Chinese trade concessions to American automotive manufacturers remains elusive.