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Xi Opens Shanghai Import Expo

6 November 2018

On Monday, President Xi Jinping opened China’s first ever import-oriented expo in Shanghai. The President, under strong pressure from Trump on trade, never mentioned the US president by name but sent a strong message claiming that China was a defender of free trade and opposed to protectionism. He said that China would continue opening up and be an attractive market for foreign investors. China would not close its door but would not be pressed to act against its own interests. 

EU officials said that it was now time for China to follow through on the nice speeches. “Action, not words” was the comment of one EU business executive who broadly welcomed Xi’s speech. There was concern, however, that a planned agriculture agreement between the EU and China was postponed at the last minute because of concerns raised by Beijing.

The Expo has delegations from over 130 countries with leaders from Hungary, Vietnam and Pakistan prominent in the opening ceremony. Unsurprisingly there was no official delegation from the US.

The Expo’s timing is highly opportune, given Washington’s ongoing retreat from the multilateral trading framework and the U.S. imposition of tariffs on Chinese exports. Europe, another victim of President Trump’s protectionist trade policy and his withdrawal from the multilateral arena, has found itself in a situation similar to that of China – Europe has not only entered into a unconventional alliance with China on issues of common interest (such as the Iran nuclear deal and the Paris Agreement), it has also reinforced its political will to strengthen economic relations with China. 

Xi, aiming to capitalize on this gravitation in global power relations, announced the Expo at the Belt and Road Forum in May 2017 as a “major policy initiative and commitment taken on our own accord to open up the Chinese market.” The Expo however is much more than a trade fair – for Xi, the real added value of the Expo lies in its contribution to China’s reputation as an outward looking global player, ready to defend the multilateral trading system in times of global uncertainty.

However, commitments on opening up the Chinese market to foreign investment repeatedly made at high profile events such as the Belt and Road Forum, the Bo’ao Forum, and the Forum on China-Africa Cooperation have failed to materialize – drawing criticism from a number of European states. Criticism on China’s Belt and Road Initiative has also been growing with the EU and the US alleging China of constructing a sphere of influence in Central Asia, East Europe and Africa by handing out massive high-interest loans for commercially and environmentally questionable infrastructure projects. There has been push back on several projects in Pakistan, Malaysia, Sri Lanka and Myanmar.

The Expo is designed to showcase China as a key trading nation determined to be a constructive pillar of the multilateral trading system. But as confidence in the world’s second-largest economy stutters, whether China’s message resonates will depend on Xi’s willingness to open up China by truly lifting joint venture requirements and tackling issues such as IPR theft. As illustrated by the striking absence of the United States from the Expo, many key trading nations are running out of patience – and faith. It is up to Xi to give his key trading partners the reciprocal treatment they insist they deserve.