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The Significance of China’s International Import Expo

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Pacific Money

The Significance of China’s International Import Expo

The implications of China’s “first national expo” dedicated to imports.

The Significance of China’s International Import Expo
Credit: Wikimedia Commons / Poom

The China International Import Expo (CIIE) is slated to be held in Shanghai, a global financial hub, in November 2018. It will be co-hosted by the Chinese Ministry of Commerce (MoC) and Shanghai’s municipal government. Preparations are underway for the gigantic event, which is expected to attract over 100 countries and regions. For instance, Orient International Co. Ltd, a Chinese trading enterprise, has created a one-stop service to assist foreign businesses with customs declaration, transport, and exhibition.

To make the event a success, the Chinese government has invited political elites, business persons, exhibitors, and purchasers from all over the world to expand trade with China. The Chinese Embassy in Canada identifies the following scheduled activities at the Expo: supporting activities such as meetings on supply-demand matchmaking, seminars, and product release; country pavilions for exhibitions by “relevant countries and regions” on their trade and investment achievements; and enterprise and business exhibition on trade in goods and services. Notably, the Expo is an outcome of Chinese President Xi Jinping’s announcement at the Belt and Road Forum for International Cooperation in May 2017.

Underlining the motivation to organize the CIIE, Wang Dongtang, deputy director of the MoC’s foreign trade department, stated:

In the coming five years, China will import products and services with a value of over 10 trillion U.S. dollars. It is our sincere hope that, through CIIE, we can advance economic globalization and build an open world economy so as to generate favorable conditions to build a community of shared future for mankind.

Against the above backdrop, the upcoming event turns the spotlight on the following facets of China’s economic diplomacy and economic imperatives.

Attempt to Demonstrate a Commitment to Globalization

Since 1957, China has organized the Canton Import and Export Fair (previously known as the Chinese Export Commodities Fair), whereas the CIIE is the “first national expo in the world” which is centered on imports. The event thus affirms China’s determination to relay the message of its unequivocal commitment to inclusive globalization in the wake of the growing perception about U.S. retrenchment from the liberal economic order under the Trump administration. If we recollect, in his sermonic stance against protectionism, Xi made the following statement at the World Economic Forum (WEF) in January 2017: “We should commit ourselves to growing an open global economy to share opportunities and interests through opening-up and achieve win-win outcomes. One should not just retreat to the harbor when encountering a storm, for this will never get us to the other shore of the ocean.” And interestingly, the Chinese state media is touting  Xi’s advocacy of globalization as the inspiration behind this year’s World Economic Forum with its ennobling theme of “Creating a Shared Future in a Fractured World.”

In other words, the Expo, though just an event, emanates from China’s ambition to emerge as the arbiter of the global economy — the process of which was kick-started by the launch of the Belt and Road Initiative (BRI). As Xi stated at the WEF in 2017, “China has not only benefited from economic globalization but also contributed to it. Rapid growth in China has been a sustained, powerful engine for global economic stability and expansion.” In support of this statement, he pointed out that China provided over 400 billion yuan of foreign assistance between 1950 and 2016, and it drew more than $1.7 trillion of foreign investment and made over $1.2 trillion of direct outbound investment since the launch of economic reforms.

Interestingly, however, in contrast to the United States’ long-held sway in the global architecture as a developed nation, the Chinese leadership has discreetly underlined China’s status as “the world’s largest developing country” on global platforms. Such positioning not only tempers China’s self-approbation for its economic success with humility but also injects solidarity into its ties with developing countries, pillared on China’s rallying urge for the “march arm-in-arm toward a bright future.”

Locking in Consumption at Home

The CIIEO is also a big step in the continuation of China’s “proactive import policy.” In November 2017, the government announced it was slashing tariffs on 187 consumer products, which, as the Chinese finance ministry said, were in “short supply domestically,” in order to  support the “upgrade of domestic supplies.” An overarching rationale is believed to be the ongoing restructuring of the Chinese economy by boosting domestic consumption.

Services, consumption, and innovation are the planks of the raft of the Chinese economy, which is sailing away from exports and investments to which China’s economic growth had been anchored for decades. In this regard, Allan Golombrek provides a realistic explanation for China’s emphasis on opening up to imports:

Instead of undermining domestic producers and workers by enhancing competition from foreign sources, reduced tariffs are likely to encourage more consumption within China’s borders, rather than seeing it seep outside the country’s borders. As reduced tariffs lead to reduced prices, more lower-income Chinese workers will also get a crack at buying more consumer goods. And the reduced tariffs may also provide a significant boost to China’s burgeoning e-commerce sector.

Power Projection

Finally, by expecting to gather 150,000 domestic and foreign purchasers for the CIIE, China is keen to dazzle the outside world with the allure of its domestic market and its stated intent to be welcoming of foreign goods and services, further locking the destinies of foreign economies into the Chinese support base. The event will also enable the Chinese government to take stock of the export priorities and expectations, and possibly strategies, of foreign countries vis-à-vis China, apart from generating a picture of China’s position in their trade calculus. This in turn will facilitate China’s appraisal of import policy through a realistic perspective.

Opening the door is one thing and leaving it open is another. While the import expo or any such event signifies China’s readiness to open its market to foreign traders, the practical impact will be more important. It is an open question whether foreign countries end up whittling down their trade deficits with China or penetrating the Chinese consumer market — or whether abrupt state regulation pops up in defense of domestic brands, marring the business prospects of foreign suppliers, while imports find their way simply into select sectors where domestic supply is insufficient.

China needs to prove its belief in shared prosperity.

Romi Jain is Vice President of the Indian Journal of Asian Affairs. She holds an MBA from San Francisco State University, California, and also holds M.A. and B.A. Honors degrees in Political Science.