China elites seek to de-escalate trade tension before Xi speech
Government advisers dismiss reports of secret plan to sell off US Treasury bills
Chinese business leaders and government academics aimed to de-escalate trade war tension on Monday, in advance of a speech by president Xi Jinping in which he was expected to announce new market-opening measures to address US concerns.
China has sought to play the role of responsible guardian of the global trading system in response to tariffs from US president Donald Trump and the threat of even harsher sanctions to come.
At the annual Bo’ao Forum for Asia in the resort island of Hainan — billed as “China’s Davos” — Chinese speakers played down rumours that China was making preparations to escalate the conflict.
Among the more extreme options for China would be to dump holdings of US Treasuries, of which it held at least $1.2tn at the end of last year.
“Some people in the market worry that if China sells US assets in large amounts, it could cause the US exchange rate to [weaken] and influence the entire world. But I think the likelihood is very small,” Zhang Yuyan, director of the Institute of World Economics and Politics and the Chinese Academy of Social Sciences (CASS), a government think-tank, told the forum on Monday.
The renminbi hit its strongest level against the dollar last week since the currency’s shock devaluation in August 2015. But Bloomberg reported on Monday, citing unnamed sources, that Beijing was analysing the potential impact of renminbi devaluation as a tool to combat a trade deal that results in lower Chinese exports.
Asked about the report, Li Yang, former vice-president of CASS and a former member of the People’s Bank of China’s Monetary Policy Committee, said: “It’s unlikely that a trade war will spread into a currency war.”
At a speech on Tuesday morning, Mr Xi is expected to announce new economic reforms and market-access measures in a delicate attempt to answer complaints by the US and other trading partners without appearing to bend to foreign pressure.
Greater market access for securities and futures companies, fund managers, and payments operators have been previously discussed, but Mr Xi may provide further carrots on Tuesday.
On Friday, a Chinese commerce ministry spokesman repeated Beijing’s stance that “China doesn’t want a trade war, but we’re not afraid to fight a trade war.”
At a speech on Tuesday morning, Mr Xi is expected to announce new economic reforms and market-access measures in a delicate attempt to answer complaints by the US and other trading partners without appearing to bend to foreign pressure.
Greater market access for securities and futures companies, fund managers, and payments operators have been previously discussed, but Mr Xi may provide further carrots on Tuesday.
On Friday, a Chinese commerce ministry spokesman repeated Beijing’s stance that “China doesn’t want a trade war, but we’re not afraid to fight a trade war.”