SINGAPORE (Apr 16): Big money did not get big by being stupid, but big money can be remarkably dumb at times. The collective sigh of relief from markets over Chinese President Xi Jinping’s comments at the Boao Forum for Asia Annual Conference 2018 held from April 8 to 11 reflects a poor understanding of the speech. The narrative in the US and much of the Western media is that Xi has backed down in the face of the threat of a trade war initiated by the US. A closer reading of the speech suggests this is not quite correct.

It is true that Xi did nothing to ratchet up the trade war rhetoric, matching bellicosity with bellicosity. It is also true that Xi announced a range of measures on tariffs, intellectual property and capital markets that appeared to be a direct response to and appeasement of US President Donald Trump’s strident demands. It is these aspects that the Western markets latched on to as proof that Trump is winning the trade war and that China was not going to escalate the situation.

As is often the case in China, it is what is not said that is more important than what is said. What was not said included any new policy announcements in relation to tariffs, capital markets and intellectual property protection and development. All of Xi’s comments in these areas have already been foreshadowed in previous policy announcements. Some aspects have been moved forward, but this is a change in appearance, not a change in substance.

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