REPEAT:MNI INTERVIEW:China Liberalisation Boosts Trade Chances

--China To Deepen Market Reforms In 2019, Former Commerce Minister Says

--Liberalisation Will Make Resolving U.S. Trade Dispute Easier, Wei Jianguo Says

By Iris Ouyang

     BEIJING (MNI) - China will press on with economic liberalisation in 2019,

making it easier to resolve a trade dispute with the U.S., former commerce

minister Wei Jianguo told MNI in an interview.

     Policies could include reforms of state subsidies and of state-owned

enterprises and improving market access for foreign financial institutions, Wei

said. Many of these coincide with demands made by the U.S. in trade talks,

making an agreement likely within the 90-day window agreed by presidents Xi

Jinping and Donald Trump, he said.

     "We will issue more policies to enhance openness this year," Wei said.

"Such as reducing market restrictions, improving the negative list for foreign

investment, enhancing protection of intellectual property, and announcing

measures to place foreign, private and state-owned companies on a level playing

field."

     Moves to strengthen intellectual property protection -- by improving

legislation and imposing strict punishment on violations -- are in line with the

objective of a higher quality life for the Chinese people, said Wei, currently

vice chairman and deputy executive officer of the China Centre for International

Economic Exchanges. The same motivation will allow it to increase imports from

the U.S., he said.

     "China enacting structural reforms is not making concessions," Wei

iterated. "It's not that we do whatever the U.S. demands us to, but it's that we

feel the need to make such progress."

     --TARIFFS LIKELY TO BE ROLLED BACK

     Tariffs imposed by the two nations during the dispute - the U.S. has

slapped extra duties on Chinese goods worth $250 billion and China has responded

with levies on $110 billion in U.S. imports - are likely to be wound back during

the negotiating period, he said.

     Reform of state-owned enterprises will enter a "key stage" in 2019, the

70th anniversary of the establishment of the People's Republic of China under

the leadership of the Communist Party. The government could reduce subsidies for

both SOEs and other sectors, as well as offer more support to small- and

micro-sized companies by removing hidden barriers to obtaining financing.

     "China will make a significant step forward towards reforming its SOEs and

state subsidies to be in line with international standards," Wei said.

     Policy makers will further address lenders' reluctance to provide credit to

small- and medium-sized companies, something which has hindered development and

hurt employment, by allowing the introduction of foreign competition.

     "Many large enterprises grew from small- and medium-sized companies," Wei

said. "Some banks' management need to be reformed. China should accelerate the

introduction of foreign banks into the Chinese market, in order to force the

domestic financial market to reform."

     Top-down reforms face strong resistance from interest groups, but the

central government is determined to persist, ensuring that

small-and-medium-sized companies can obtain financing and lifting some

restrictions on foreign investment, Wei said.

     --REFORM MOMENTUM

     "The momentum of market reform lies with companies, no matter whether they

are private, state-owned or foreign companies," Wei said. "It's like cells of a

human body, only when the companies are energized can the market reform be

energized."

     Wei spoke to MNI after Chinese and American officials held trade talks in

Beijing last week. Despite no major breakthroughs on sticking points such as

alleged forced technology transfers, the Chinese government is said to have

promised to increase imports of U.S. agricultural goods, energy, and

manufactures such as vehicles.

     "This is a small step by both sides to enhance trust in each other," Wei

commented, "But it's a big step towards future cooperation and is a key step

towards paving the way for the next higher-level talks."

     "As long as the issues China and the U.S. discuss do not hurt China's core

interests, and there is no demand for China to accept U.S. inspections, they can

be solved," he said, characterising talks so far as "efficient" and "sincere",

with both sides eager to reach consensus.

     But, while China will take steps to boost its purchases from the U.S., it

will not commit to specific quantities of purchases, as this would go against

market logic, Wei said.

     "China will increase imports from the U.S., but we will not promise how

much. It's because we need to import depending on needs of the market. If the

government imposes some restrictions, then we are back to the old path we were

on before we opened up to the world."

     Wei said China has never forced foreign companies to hand over technology

as the U.S. claims, but added: "We can strengthen legislation to prevent this

from happening."

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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