Nearly 40 years since starting to liberalise its economy, China’s adoption of a fully fledged market economy is still far from complete. But one thing it has picked up from the democratic capitalist west along the way is an ability to spin small changes in policy to placate its international partners.
China showed its prowess in this area by offering some trade liberalisation measures following Xi Jinping’s meeting with Donald Trump in the US last week. Beijing is ready to lift a hygiene-related ban on American beef imports, which has been in place since 2003, and remove some restrictions on foreign companies investing in its financial services sector. By giving Mr Trump some impressive-sounding victories to tout at home, China may hope to forestall some of the wilder protectionist acts the US president has been threatening. Yet ironically, one of the outcomes it is keen to avoid — having the administration label China a currency manipulator — is one for which there is no basis and hence it can do little to affect. It is genuinely innocent.
China’s decision was designed to make a big noise without necessarily changing very much. The pronouncement on beef involved a highly symbolic American product. The agreement to open its financial services sector, meanwhile, may not make a dramatic difference in reality. Western companies are likely to be chary about plunging into a debt-laden Chinese financial system.