Xi Tells China's Critics To "Mind Your Own Business" In Trade Expo Speech; Pledges $30 Trillion In Imports

"Worry about your own damn self (Mr. Trump)."

That was the overriding message delivered by Chinese President Xi Jingping during his address at the International Import Expo Opening Ceremony in Shanghai on Monday, which featured more than 3,600 companies from 172 countries, regions and organizations, and where Xi urged critics of China's policies to worry about their own problems before opining on China's, according to the FT.

"Each country should work hard to improve its own business environment. One cannot always beautify oneself while criticising others, and one can’t shine a flashlight on other people without looking at oneself," said Mr Xi.

That said, Xi stopped short of naming Trump or the U.S. in the speech, his most high-profile economic address since April. Instead, and without a trace of irony, he stepped up warnings that protectionism would harm global growth while pledging to boost domestic consumption, strengthen intellectual property protection and advance trade talks with Europe, Japan and South Korea.

If there was a dominant theme from the expo - which is being held as China's trade surplus with the US has continued to expand in spite of US tariffs on roughly half of Chinese goods crossing its borders - it was China's attempts to position itself as the leader of a bloc of emerging-market nations, as the US and many of its allies declined to send government delegations (though, to be sure, representatives of many of the largest US corporations did attend). All told, 18 heads of state were expected to attend the summit. The Chinese government declared Monday and Tuesday holidays in Shanghai to ameliorate traffic for the event, which Xi has said will be held annually from here on out.

Xi

But rather than breaking new ground, Xi's speech was essentially a re-tread of his Davos 2017 address, touting China's plans for liberalizing its market while castigating its critics. Meanwhile, the upshot from his remarks on trade, if there was one, was that China will stand its ground in still-simmering trade dispute. Many of the Western executives in the audience, who traveled a long way to attend, privately told the FT that they are growing tired of hearing the same vague reform promises from China. Representative of 3,600 companies from 172 countries are attending the expo. Of these, about 180 US companies sent representatives including Alphabet, Boeing, Caterpillar, Facebook, General Motors and Honeywell.

Mr Xi pledged further opening measures in telecoms, medical care, education and culture without elaborating. He forecast that China would import $30tn in goods and $10tn in services over the next 15 years — a figure that does not imply significant acceleration from China’s current import trajectory. Foreign business executives and diplomats privately say that they are wary of vague commitments and are awaiting specific reforms on market access and intellectual property.

"Meaningful progress can only be claimed when major structural challenges are positively dealt with and international companies can compete on an equal footing with domestic ones," said Carlo D’Andrea, vice-president of the European Union Chamber of Commerce in China.

"The (expo) may well help many countries to reduce their trade deficits with China, but it will not help Shanghai to become a global centre or China to reduce its internal reform deficit."

He added that China would support "necessary" reforms to the World Trade Organization to protect the multilateral trading system.

As official data reflected weaker activity in China's services sector and China's A-shares remained stuck in a bearish rut, Xi tried to assure his audience that China would do a better job of protecting intellectual property (even as the US DOJ is cracking down on its intelligence services' corporate espionage).

Without naming his US counterpart, President Xi criticized US President Trump’s "America First" policies, blasting them as "law of the jungle" and "beggar-thy-neighbor" trade practices. While he insisted that protectionism would harm global growth, Xi insisted that China was serious about accelerating the opening of its economy. However, even though they heard it before in September, investors were apparently excited about a headline about Xi's pledge to cut China's import tariffs. They also liked a headline about Xi's pledge to boost imports to $30 trillion over the next 15 years, up from $24 trillion.

In an ironic twist, Xi also touted China as a paragon of openness as he voiced his "sincere commitment" to open the Chinese market to international investors (see our response here).

"He repeated a lot of the planned policies we have already heard in the past few months," said Sue Trinh, head of Asia FX Strategy at RBC Capital Markets in Hong Kong. "Markets seemed to like the headline ‘to cut import tariffs,’ but this plan was already announced in September and can only be milked so many times."

Xi affirmed last week that he and Trump would meet at the G-20 to continue trade talks, but since then, reports about a possible detente in the trade war have repeatedly emerged, only to be swatted down by the administration. The upshot: It will be months before we know more, which means many more market bursts higher on speculation.