China’s Xi to Give Speech Tuesday; Trade Tensions: Boao Update

(Bloomberg) -- China’s President Xi Jinping will address the annual Boao Forum Tuesday and his video speech will touch on the risks and challenges the world is facing, and what solutions his country offers to overcome them.

Chinese government officials and business leaders are gathered this week on the tropical island province of Hainan for the forum, with discussions encompassing topics from digital currencies to carbon neutrality and the economic outlook for a post-pandemic world.

Billed as an Asian version of the World Economic Forum, the event kicked off Sunday and is slated to run through Wednesday. On the first day of the conference, a senior Chinese central bank official said the nation’s goal for internationalizing its currency is not to replace the dollar, and efforts to create a digital yuan are aimed at domestic use.

Bloomberg News captured the pulse of the event throughout the forum. Updated as of 4:45 p.m. in Beijing.

What to Watch:

Latest developments:

Xi to Touch on China’s Solutions for Global Problems

Chinese Foreign Ministry spokesman Wang Wenbin gave a taste of what Xi will discuss during a regular press briefing Monday in Beijing. Xi’s keynote speech will touch on the risks and challenges the world is facing, and what solutions China can offer to promote development and prosperity, the spokesman said.

“This reflects the world’s aspiration to address changes and strengthen global governance,” Wang said. “China hopes all parties will have a full discussion, and make plans for better development and to create a better future for Asia and the world.”

Wang declined to identify the second senior official who state media reports indicated will attend the forum in person, saying the ministry would release information “in due course.”

JD.com Sees Encouraging Signs as Poorer Consumers Spend

China’s low-income households are picking up spending, boding well for overall consumption in the economy and a sign of a more balanced recovery, the chief economist of e-commerce giant JD.com Inc.said.

Higher earners in the nation’s biggest cities expanded their spending during the pandemic last year to splurge on luxury and electronic products such as phones and computers, Shen Jianguang said in an interview at the Boao Forum. The driver for consumption is now starting to shift to smaller cities, he said.

“Recently we are seeing a lot of people started working and all the shops are open,” he said. Consumption is “more geared toward necessity goods and less discretionary goods” and spending in tier-three and tier-four cities are picking up, he said.

Maersk’s China CEO Calls Politicization of Trade a ‘Great Pity’

The business community was glad to see Europe and China reach the Comprehensive Agreement on Investment, but “then we have seen that political differences have sort of created issues that could make an early ratification difficult to achieve,” according to Jens Eskelund, China CEO of shipping firm AP Moller – Maersk A/S.

Esekelund is also vice president of the EU Chamber of Commerce in China.

“I think it is something that the EU Chamber of Commerce sees as a worrying tendency that trade sometimes becomes politicized and that political difference have spillovers into the commercial arena. It’s something we think is a great pity,” he said on a panel at the Boao Forum. “Our hope is that, irrespective of the current differences, that it will be possible for the two sides to find some sort of common ground that leads to ratification.”

In a position paper published in September 2020, 43% of the chamber’s members reported that the business environment had become increasingly politicized compared to the previous year.

Crowded Rooms, Not Many Masks

The Boao Forum is the first big offline event in China this year, with over 2000 people attending. That’s fewer than in previous years, but it’s still a shock to suddenly be back in an environment with people crammed into meeting rooms, or in a press room with journalists pressed cheek by jowl. While there’re still some signs of the pandemic, including plastic barriers on the dinner tables, one big visual surprise is just how many people aren’t wearing masks.

While there are basically no virus cases in China, the country’s efforts to deal with the return to normal is still a process of trial and error. Initially the Boao Forum demanded that all journalists attending be vaccinated. But that was soon rescinded, likely because there wasn’t enough time for everyone to have the two shots needed. Still, all attendees had to have a virus test before coming to Boao, and then another one on arrival. So even if the masks are gradually coming off and life is returning to normal, there’s still a long way to go.

Boao Forum Returns After Hiatus

China is signaling it’s open for business with the resumption of the high-profile Boao Forum for Asia, an opportunity for the government to make a renewed effort to lure foreign investors in a post-pandemic world. The event was canceled last year as a result of the coronavirus pandemic.

Digital Yuan Not to Replace Dollar

China’s goal for internationalizing its currency is not to replace the dollar, and the efforts to create a digital yuan are aimed at domestic use, a senior central bank official said Sunday.

“For the internationalization of the renminbi, we have said many times that it’s a natural process, and our goal is not to replace the U.S. dollar or other international currencies,” People’s Bank of China Deputy Governor Li Bo said Sunday.

Internationalizing Yuan a Top Priority, Says Economist

The top priority for China’s financial sector is promoting the global use of its currency and opening up the financial markets, instead of digitizing the yuan, said Wu Xiaoqiu, director of the Finance and Securities Institute at Renmin University of China.

“Global history tells us a country’s financial opening up always begins with liberalizing the currency,” said Wu at a presser at the Boao Forum. “The key task now is not to put so much focus on the digital currency.”

China should work toward allowing free cross-border flow of capital and greater exchange rate flexibility, Wu said. The country’s economy is solid enough, and liberalizing the yuan exchange rate is unlikely to lead to a crisis of sudden depreciation of the yuan, he added.

CanSino Checking Vaccine Safety Closely

CanSino Biologics Inc. is monitoring its Covid-19 vaccine more carefully after cases of blood clots forced other suppliers to suspend inoculations. “We’re just monitoring more cautiously,” CanSino Chairman Yu Xuefeng said on the sidelines of the Boao Forum.

The comments come as a vaccine from Johnson & Johnson was halted in Europe after U.S. officials paused immunizations to investigate blood clots suffered by six women.

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