Chinese President Xi Jinping is expected to lay out his plans for a more innovation-driven and self-reliant economy on a tumultuous day for investors.
Xi is scheduled to deliver a speech at the opening of the China International Import Expo on Wednesday in Shanghai, an annual event he has used since 2018 to tout China’s importance in global trade. His comments will be keenly watched, given the backdrop of the U.S. election result and the shock withdrawal of what would’ve been the world’s biggest stock-market debut, the listing of financial technology giant Ant Group Co. in Shanghai and Hong Kong.
He’s unlikely to address those events directly in his speech, sticking instead to China’s broad commitments to economic opening at a time when Beijing’s growth model faces increasing challenges from the U.S. The trade expo comes less than a week after the ruling Communist Party laid out development blueprints stretching until 2035 that stressed the importance of self-reliance in technology and boosting the domestic market. Xi also outlined an ambition to double the size of the economy during that time.
“There is little doubt that the recent emphasis on tech independence and ‘dual circulation’ are raising concerns among trading partners about China’s future direction,” said Shaun Roache, chief Asia-Pacific economist at S&P Global Ratings in Singapore. “We expect the president to try and allay some of these concerns but most observers will be waiting for the next five-year plan for a clearer view of where China is headed.”
Xi has previously used the trade expo to reiterate China’s commitment to economic openness and the global trading order. During the first event in 2018, Xi announced a plan to set up a Nasdaq-style stock board in Shanghai, in an apparent bid to encourage internal innovation and reduce reliance on U.S. technology. The Star board has since emerged as the main listing venue for China’s leading tech companies, with Ant scheduled to make its debut there this week before the IPO was pulled.
Xi’s speech on Wednesday evening in Asia would be hours after polls close in the U.S. While he usually avoids overt references to the U.S. or its leaders, he took a veiled swipe at President Donald Trump’s “America First” policies at last year’s expo, saying “we need to tear down walls, not to erect walls.” Democrat Joe Biden, a past proponent of engagement with Beijing, has adopted a more critical tone during the campaign and pledged to enlist allies to a more coordinated effort to check China’s rise.
China has been seeking to use the import expo to showcase its demand potential for quality goods and services and bring in foreign direct investment. Multibillion-dollar purchase deals have been signed at previous trade fairs, although many haven’t materialized. The coronavirus pandemic has made it difficult to honor some of the contracts signed last year.
Many international companies, including some top players in the pharmaceuticals, medical appliance, dairy, automotive and construction equipment sectors have signed up to join the expo, which is also comprised of multiple business seminars and forums on the sidelines, Chinese officials have said.
Top executives of many global firms and foreign state leaders will only join via video links and those who do attend will face mandatory nucleic acid tests and temperature screening. Social distancing is also required—the government will ensure the maximum number of people in the exhibition center in western Shanghai doesn’t exceed 30% of its capacity.
“We expect President Xi to reassure trade partners that its economy remains ‘open for business’ even as the fifth plenum confirmed the push for technology independence,” Roache said. “We expect him to reiterate that opening up remains important for China’s own development and that other countries can share in China’s growth.”