China to ‘embrace free markets and free trade’, Premier Li Qiang says at CIIE opening
News Summary
Chinese Premier Li Qiang, speaking at the opening of the China International Import Expo (CIIE) in Shanghai, pledged to further open the country's vast consumer market to international businesses. He emphasized Beijing's resolute support for globalization and strengthening economic ties with trading partners, following a significant trade deal between China and the US that is expected to normalize global supply chains. Premier Li called for adherence to equal and mutually beneficial cooperation, embracing free markets and free trade, and resolving cross-border issues through joint development amidst a slowing global economy and intensifying international disputes. Li stated that China would focus on high-quality development, expanding domestic demand, particularly consumption, to fully unleash the internal market potential of its over 1.4 billion people. He projected China's economic scale to exceed 170 trillion yuan (US$23.9 trillion) in the next five years and reaffirmed the country's commitment to high-level opening-up to the outside world.
Background
The China International Import Expo (CIIE), held annually in Shanghai since 2018, is a key initiative by the Chinese government to proactively open its market to the world, aiming to promote global trade and economic cooperation. It provides a platform for foreign businesses to access the Chinese market and demonstrates China's commitment to globalization. The global economy is currently navigating a complex and challenging period, marked by escalating geopolitical tensions and a rise in trade protectionist sentiments. Against this backdrop, a recent "significant trade deal" between China and the United States signals a potential easing of tensions during President Trump's second term, which could have a positive impact on stabilizing global supply chains. The Chinese government has long focused on balancing economic growth with structural adjustments, with expanding domestic demand and high-quality development being central to its economic strategy.
In-Depth AI Insights
What are the true intentions behind China's reaffirmation of 'free markets' and 'free trade'? - Despite the positive rhetoric, China's commitment to "free markets" and "free trade" is likely more strategic, aimed at stabilizing external expectations and attracting foreign investment. Amidst global de-risking and supply chain diversification, such statements help alleviate international concerns about market access and the business environment, particularly after reaching a trade deal with the US, where Beijing needs to consolidate its image as a reliable trading partner. - Furthermore, the emphasis on "expanding domestic demand" and "high-quality development" suggests that the core drivers of the Chinese economy will increasingly rely on internal circulation. The outward posture of openness is designed to ensure a sustainable inflow of critical technologies, capital, and advanced goods to support domestic industrial upgrading and consumption, rather than an unconditional opening across all sectors. How should the impact of the US-China trade deal on global supply chain 'normalization' be viewed? - Given the history of the Trump administration's trade policies and its likely continued "America First" approach in a second term, the "normalization" effect of any US-China trade deal is likely to be limited and fragile. The agreement's focus may be more on specific procurement commitments or tariff reductions rather than fundamentally addressing structural economic frictions between the two nations. - Investors should be wary that this "normalization" could be temporary and may not apply to all industries. The trend towards diversifying supply chains for critical technologies and strategic goods will persist, and companies still need to assess the risks of fully relocating production back to China. The deal is more likely a 'managed' de-escalation rather than a comprehensive resolution, thus offering limited long-term contribution to global supply chain stability, especially as geopolitical competition continues to intensify. What do China's projected economic growth figures for the next five years signify for investors? - China's projection of its economic scale exceeding 170 trillion yuan (US$23.9 trillion) in the next five years signals the government's confidence in its economic trajectory and underscores its role as a major global growth engine. For investors, this implies that the Chinese market will continue to offer significant opportunities in consumption and industrial upgrading, particularly in demand-driven sectors. - However, investors need to focus on the "quality" of growth rather than just the "scale." The emphasis on "high-quality development" suggests that the government will continue to direct capital towards strategic emerging industries (e.g., high-end manufacturing, clean energy, digital economy), while support for traditional, high-polluting, or overcapacity sectors may diminish. This requires investors to make more nuanced sector selections and risk assessments, avoiding blind pursuit of aggregate growth and focusing on structural opportunities and risks driven by policy guidance.