China Pledges Open Economy & Balanced Trade Amid Surplus Concerns | Reuters

China is signaling a shift towards more balanced trade and greater openness to foreign investment, a move prompted in part by a record trade surplus and ongoing friction with key economic partners. Premier Li Qiang’s pledges, made at the China Development Forum in Beijing on Sunday, come after China reported a $1.2 trillion trade surplus for 2025, a figure that has raised concerns in Washington and Brussels about unfair trade practices and overcapacity. The announcements also follow a temporary easing of tensions with the United States, though a planned meeting between Presidents Xi Jinping and Donald Trump has been postponed due to the unfolding crisis in Iran.

Addressing the Surplus and Global Imbalances

Although Li’s speech didn’t directly address the record surplus, his commitment to import more high-quality foreign goods suggests an acknowledgement of the issue’s potential to disrupt international relations. China’s central bank governor, Pan Gongsheng, further sought to contextualize the surplus, arguing that a comprehensive analysis must consider both trade in goods and services, as well as current and financial accounts. He pointed out that while China holds the largest goods surplus, it also runs the largest services deficit. Pan also affirmed that China has “no necessitate and no intention to gain trade competitive advantage through currency depreciation,” a point of contention with some trading partners. Reuters reports on these pledges.

Foreign Investment Incentives and National Treatment

The push for greater openness extends to foreign investment, which has been declining. Foreign direct investment fell 5.7% year-on-year to $13.36 billion in January, following a 9.5% drop in 2025. To reverse this trend, China added 200 sectors to a list eligible for foreign investment incentives, including tax breaks and preferential land use, with a focus on advanced manufacturing, modern services, and green technologies. Li emphasized that foreign firms would receive “national treatment,” meaning they would be treated the same as domestic companies, fostering a more level playing field. This commitment aims to build confidence among international businesses considering investment in China.

Sector-Specific Assurances and Corporate Engagement

Beyond broad pledges, China is offering sector-specific assurances. Commerce Minister Wang Wentao met with leaders from the US pharmaceutical trade group PhRMA and executives from five major multinational drug companies, promising strengthened intellectual property protection and improved policy transparency. This is a critical step, as concerns over intellectual property rights have long been a barrier to greater foreign investment in China’s pharmaceutical sector.

High-profile corporate engagement at the forum underscored China’s efforts to reassure the business community. Apple CEO Tim Cook stated the company would continue collaborating with Chinese suppliers to advance the industry, according to state media. Senior executives from Samsung Electronics, Volkswagen, Broadcom, Siemens, BASF, and Novartis were also in attendance, signaling continued interest in the Chinese market despite ongoing geopolitical and economic uncertainties. Financial institutions like HSBC, UBS, and Standard Chartered also sent representatives, demonstrating the continued importance of China to the global financial system.

Trade Friction and the US Relationship

These moves come against a backdrop of ongoing trade friction. The past year has been marked by tariff wars with the United States and the European Union. While a temporary truce has been reached with the US, the postponement of President Trump’s planned trip to Beijing due to the Iran situation introduces a latest layer of uncertainty. Premier Li Qiang’s September 2025 meeting with US business leaders highlighted the importance of the bilateral relationship, stating that the two countries “could and should become partners and friends.” The Premier also noted the complementary nature of the two economies, with different market structures and highly complementary industries.

The Impact of US Tariffs and Trade Practices

The US has consistently raised concerns about China’s trade practices, including allegations of intellectual property theft, forced technology transfer, and state subsidies that distort competition. These concerns led to the imposition of tariffs on billions of dollars worth of Chinese goods under the Trump administration, and while the Biden administration has maintained some of those tariffs, it has also engaged in dialogue with China to address these issues. The recent decision by President Trump to postpone his trip to Beijing underscores the fragility of the US-China relationship and the potential for renewed trade tensions.

Implications for Global Trade and Investment

China’s pledges to open its economy and pursue more balanced trade have broader implications for the global economy. A more open China could lead to increased trade flows, lower prices for consumers, and greater opportunities for foreign businesses. Still, the success of these efforts will depend on China’s willingness to address concerns about its trade practices and ensure a level playing field for foreign investors. The commitment to national treatment is a positive step, but its implementation will be crucial.

The focus on advanced manufacturing, modern services, and green technologies also reflects China’s strategic priorities. The country is seeking to move up the value chain and become a leader in these key sectors. Foreign investment in these areas could accelerate this transition, but it will require a supportive regulatory environment and a commitment to innovation.

What’s Next: Implementation and Monitoring

The immediate next steps involve translating these pledges into concrete policies and regulations. The Chinese government will need to provide detailed guidance on the implementation of the new foreign investment incentives and clarify how national treatment will be applied in practice. Monitoring the impact of these policies on foreign investment flows and trade balances will be crucial.

continued dialogue with the United States and other trading partners will be essential to address outstanding concerns and build trust. The postponed meeting between Presidents Xi and Trump, when rescheduled, will be a key opportunity to de-escalate tensions and explore areas of cooperation. Chinese state media emphasized the need for both countries to “find the right way to secure along in the new era,” echoing Premier Li’s sentiment.