President Xi says China is willing and open for new free-trade deals in speech to Apec CEOs

(SCMP) – Chinese President Xi Jinping has said the country is open to signing more free-trade agreements with other nations, as Beijing seeks to boost its regional influence amid uncertainty about the new US administration.

In a speech to the chief executives’ summit at the Asia-Pacific Economic Cooperation (Apec) forum on Thursday, Xi said China would not seek to “decouple” or to form small groups to exclude others, a veiled attack on the United States.

“Openness enables a country to move forward, while seclusion holds it back,” he told the virtual meeting chaired by Malaysia.

“China has been integrated with the world economy and international system for a long time. We will not go back in history. We will not seek decoupling and form any small circle that is closed and isolates others.”

China would, however, continue to open up for foreign investors and take part in more multilateral trade mechanisms, he said, adding: “We will continue pushing for liberalisation of trade and investment and sign more high-standard free-trade agreements with other countries.”

Xi’s remarks came after leaders from 15 countries in the Indo-Pacific region signed the Regional Comprehensive Economic Partnership, the world’s largest free-trade deal involving the 10 member states of Asean (the Association of Southeast Asian Nations), Australia, China, Japan, New Zealand and South Korea.

The trade pact, which covers about 30 per cent of the world’s population and gross domestic product, could help Beijing expand its influence in the region and counter pressure from the China-US economic decoupling.

The signing of the deal on Sunday also prompted calls for the new US administration to return Washington to international trade agreements, or risk losing its influence.

China is under pressure to remove market barriers for foreign investors and make structural changes to its industrial policies, such as removing state subsidies.

Its new development model of dual circulation – a pivot towards domestic consumption to help restore the economy after the Covid-19 pandemic – has raised concerns that China is turning inward.

But Xi defended the new model, saying it did not mean China would close its markets.

“The new development model we are building is not a closed domestic circulation, but an open circulation that facilitates both the domestic and international markets,” Xi said.

The Apec gathering is seen as another platform for China to reshape regional trade amid rising uncertainty about Washington. US President Donald Trump has denounced multilateral trade agreements and it remains to be seen what policies will be adopted by president-elect Joe Biden.

No US government representatives are expected to take part in the Apec CEO summit. But Reuters reported that Trump would join the economic leaders’ meeting on Friday, making his first appearance at the event since 2017.

The Trump administration has faced criticism over its representation at last weekend’s virtual East Asia Summit, when the RCEP was signed. The US was represented by national security adviser Robert O’Brien, Washington’s lowest level representation since 2011.

Xu Liping, director of the Centre for Southeast Asian Studies at the Chinese Academy of Social Sciences in Beijing, said China would push to set up a free-trade zone in the Asia-Pacific region, but Trump’s attendance might mean the rivalry between the US and China would be played up at the summit.

“The US is sensing some urgency as Trump has been absent from Apec for a long time and from the East Asia Summit, leading to frustration about unilateralism by Washington,” he said.

“The dominant position of the US would be challenged if Trump was absent again this year.”

In his speech, Xi also said China had the ability to maintain economic stability despite the impact of the Covid-19 pandemic, citing the Chinese economy’s return to growth.

“China will further cut tariffs and government instituted transaction costs, and open a number of demonstration zones for the creative promotion of trade to increase imports of quality goods and services,” Xi said.

He also told the summit that scientific and technological innovations would help drive the country’s development, saying businesses should use this to achieve high-quality growth driven by the “supersized domestic market”.

“This will sustain China’s long-term economic development,” he added.