China policy round-up: Beijing slams ‘unacceptable’ US threats, Shanghai pushes reforms, CBIRC welcomes foreign banks’ new branches
Ministry of Commerce (MofCom) criticises Trump’s proposal of additional tariffs, Shanghai government vows to open up the city further, and the banking regulator approves international banks setting up branches and subsidiaries in China.
- The US is looking to impose 10% tariffs on $200bn of Chinese imports, according to a July 10 statement by Robert Lighthizer, the US trade representative. The threat came less than a week after Washington put 25% tariffs on $34bn of Chinese products on July 6
. China retaliated immediately last week, imposing the same level of tariffs on the same amount of US goods. Beijing’s choice to retaliate, rather than give in to US demands, prompted the White House to renew its threats, Lighthizer argued. Donald Trump, the US president, has accused Chinese companies of acquiring US technologies and threatening its national security.
“It did this without any international legal basis or justification,” he said. “These [proposed] tariffs will eventually cover up to $50bn in Chinese imports as legal processes conclude. The products targeted by the tariffs are those that benefit from China’s industrial policy and forced technology transfer practices.”
- A MofCom spokesperson protested the latest US moves in a July 11 statement, noting that China is filing additional complaints against the US at the World Trade Organization.
“This is completely unacceptable,” said the spokesperson. “China is shocked by the behaviour of the US. We are left with no choice but to retaliate, as we always do, in order to defend our core national interest and the interest of our people.”
A day later, the ministry lashed out at the US again in a long statement, published in both Chinese and English at the same time, challenging the Trump administration’s notion that China is getting a free ride in its economic relationship with the US.
“The main reason for the deficit does not lie on the Chinese side,” said MofCom. “Rather it is because saving rate in the US remains low, the dollar serves as [an] international reserve currency, and the two countries differ in industrial competitiveness and international division of labour.”
- Officials in Shanghai have rolled out 100 new rules to further open up the financial centre, according to a July 11 statement by the municipal government.
The government has committed to expanding the business scope, access channels and scale of foreign investors' presence in the city, and facilitating the connectedness of onshore and offshore financial markets. It also vowed to implement the new negative list to attract foreign investment
. Some of these measures were announced by presidentXi Jinping in April, Douglas Morton, head of research for Asia at Northern Trust Capital Markets, noted in a July 12 memo. But the move is nevertheless encouraging, especially when viewed in conjunction with recent actions taken by regulators.
“These further reform moves come following last week’s additional ‘opening up’ reforms that saw qualified foreign institutional investor (QFII) and RMB QFII (RQFII) quotas further raised by 1% [and] a shortened negative list for foreign investment in free trade zones announced,” he said.
The analyst was referring to the figures on inbound investment quotas released by the State Administration of Foreign Exchange in late June and the revamped negative list published by the National Reform and Development Commission last month.
- China has approved five foreign banks to open branches in the onshore market, according to a July 11 statement by the China Banking and Insurance Regulatory Commission
. Jordan’s Arab Bank and Taiwan’s CTBC have obtained the greenlightlight to set up branches in Shanghai and Shenzhen, respectively, while Bank of East Asia’s onshore arm will upgrade its sub-branch in Qianhai to a branch. Taiwan’s Chang Hwa Commercial Bank and Cathay United Bank have the go-ahead to open subsidiaries in Mainland China, said the CBIRC.