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Xi's promise to lower car rates is less than the eye



China President Xi Jinping's promise to lower car prices is not the victory of President Donald Trump, it seems.

While Trump praised Xi's suggestions on Twitter – "Very grateful to President Xi of China's kind words about tariffs and automobile barriers," he wrote – analysts and business leaders abhorred Xi's promises to market as old promises to open yet to fulfill. They also rejected his pledge to reduce car fares without other, major changes as irrelevant.

History continued down

"The Chinese are great at saying what people want to hear," said a US industry consultant who spoke about the condition of anonymity to be more straightforward. "Hope springs from eternity, and it would be great if the Chinese people in this speech were to step out that they really have the same conditions, and I think it's really, quite frankly, a way to make this case."

Xi's offer to cut car fares could be interpreted as "the Chinese version of an olive branch," but any reduction could be by others, not tariff barriers, said Derek Scissors, assistant professor and China economist at the American Enterprise Institute

The problem is that the Chinese are trying to appease Trump by increasing imports without addressing their massive subsidies and regulations that make foreign companies more competitive. In their market, Scissors said.

Xi's speech leans less towards the Trump administration problem than an "olive branch," which is likely to boost only marginally greater market access, said Scott Kennedy, a China analyst at the Center for Strategic and International Affairs Studies [1

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"If the government's goal is to move the trade balance slightly and improve market access, that would be the starting point of a negotiation," Kennedy said. "But if China wants to restrict China's industrial policy, it will not even bring China to the table."

As a political explanation, Xi's speech played well for those worried about a trade war. The forum gave him the opportunity not only to speak with the White House, but also to gain allies among other world leaders, more in line with Xi's declared vision of open markets and a strong trading system than with Trump's zero-sum worldview said Kennedy

Xi seemed to be attuned to Trump's trade priorities, though he never mentioned the American president by name. He promised to boost imports to reduce China's trade surplus, strengthen intellectual property protection, improve the investment climate and reduce market access barriers.

"This year, we will significantly reduce import tariffs for cars and lower import tariffs for some other products," Xi added. "We will import more products that are competitive and needed by our people."

The White House's New Business Adviser, Larry Kudlow, said he had been encouraged by Xi's speech in an interview on Tuesday's "The Hugh Hewitt Show" talking about "all the things we've said 'are wrong' and promised that the change will come, Kudlow said. "If that's the case, the whole game changes."

It was not until Monday that Trump complained about the terms of the Chinese agreement to join the World Trade Organization in 2001, which allowed him to retain a 25 percent duty on foreign investors for cars, while the United States only imposed a tariff of 2, 5 percent on car imports. "Does that sound like free or fair trading? No, it sounds like DUMM TRADE – it's been around for years!" Trump wrote on Twitter.

But even White House officials emphasized that words could not stop Trump from promoting possible tariffs on Chinese goods.

"Surely we are encouraged by the words of President Xi," spokeswoman Sarah Huckabee Sanders told reporters. "At the same time, however, we want to see concrete action from China, and we will continue in the process and in the negotiations until these things happen."

Several business leaders were more critical, they said I heard little news and am increasingly frustrated by China's pledges to accelerate the reform with little or no after-effect.

"The economy wants China to implement the promised reforms rather than just talking about them," said John Frisbie, president of the US-China Business Council. "Lack of implementation creates uncertainty and undermines business confidence."

Kennedy warned that mentioning Xi & # 39; s words as "a big step forward" could actually lead to a tightening of tensions between the two countries. The administration must speak clearly and consistently about what its goals are, "he said. "It's certainly possible that Xi Jinping reads the market's reaction and comments from Kudlow and others, and thinks, 'Oh, what we have to do is just a limited offer for market access, and that should be acceptable. & # 39;

Schers said it was important for the US to articulate specific demands from Xi for reforming Chinese industrial policy. "Even in private discussions, the government was unable or unwilling to make any specific changes in the past week Chinese people recognize, "he said.

Scissors added that the ball was in the US court to persuade Beijing to a more substantive discussion.

This could involve the imposition of tariffs on Chinese imports initially $ 50 billion generated by a study of intellectual property practices in China and an enumeration of the additional $ 100 billion in products […] "We can inflict more pain on them than they can inflict on us," said Scissors, noting that the US Last year, goods worth more than $ 500 billion from China imported US $ 130 billion worth of goods imported by China. "So your advantage is that we will not cling to it, which can be very good."


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