In Davos, Xi makes case for Chinese leadership role

DAVOS, SWITZERLAND: Chinese President Xi Jinping offered a vigorous defence of globalisation on Tuesday, pushing back against the "America First" rhetoric of incoming U.S. president Donald Trump and signalling Beijing's desire to play a bigger role on the global stage.

Xi's speech to political leaders, CEOs and bankers at the World Economic Forum in Davos was a first by a Chinese leader and marked a possible shift in the global political landscape as western democracies struggle with the rise of populist nationalism.

China, a one-party communist state that maintains tough restrictions on foreign investment, would seem an unlikely champion of free markets at an event that has become synonymous with global capitalism.

But with Trump promising a more protectionist, insular approach and Europe preoccupied with its own problems, from Brexit to terror attacks, China sees an opportunity to fill what could become a vacuum in global economic leadership.

Speaking before a vast audience that included U.S. Vice President Joe Biden, Xi likened protectionism to "locking oneself in a dark room" and cutting off all "light and air".

"No one will emerge as a winner in a trade war," Xi said in the nearly hour-long speech.

Real estate mogul and former reality TV star Trump, who will be inaugurated as U.S. president on Friday, campaigned on a promise to confront China more aggressively on trade and renegotiate or ditch multilateral trade agreements.

His entourage has accused China of waging economic war against the United States.

But Xi pushed back against the accusations of unfair trade practices, saying Beijing would not devlaue its currency for competitive advantage, as Trump has repeatedly accused it of doing in the past.

Xi also urged all signatories of a landmark climate deal agreed in Paris roughly one year ago to stick to the agreement, a clear message to Trump, who has criticised the deal and indicated he may pull the United States out of it.

"LOOKING TO CHINA"

In a sign of China's ambitions, more than half a dozen senior Chinese government figures joined Xi in travelling to Davos in the Swiss Alps this week, a bigger and more high-level delegation than in previous years.

A large number of WEF panels are focused on Asia, including one entitled "Asia Takes the Lead".

"In a world marked by great uncertainty and volatility the world is looking to China," WEF founder and chairman Klaus Schwab said before welcoming Xi to the stage.

Former Swedish Prime Minister Carl Bildt, reacting to Xi's speech on Twitter, said: "There is a vacuum when it comes to global economic leadership, and Xi Jinping is clearly aiming to fill it. With some success."

Ian Bremmer, president of political risk consultancy Eurasia Group, tweeted: "Davos reaction to Xi speech: Success on all counts. Miles away from any official Chinese speech before".

Xi's appearance comes at a time of rising tensions between Beijing and Trump, who broke with decades of precedent last month by taking a congratulatory telephone call from the president of Taiwan, which Beijing sees as part of China.

Last week Trump said America's "One China" policy was up for negotiation, triggering a furious response from state-run Chinese newspapers who said Beijing would be forced to "take off the gloves" if Trump did not change his rhetoric.

Although Xi painted a picture of China as a "wide open" economy, his government has come under mounting criticism from trading partners for its continued restrictions on foreign investments at a time when its state-run firms are aggressively pursuing acquisitions in Europe.

In an apparent nod to these criticisms, China's cabinet announced ahead of Xi's speech that it would take steps to ease limits on investment in banks and other financial institutions. But no further details were provided, nor a timetable for their implementation.

Some officials, speaking on condition of anonymity, suggested that China was simply manoeuvring to take economic advantage of what appears to be a growing divide between the United States and Europe.

BIG QUESTION MARK

"Today, I think there is a big question mark as to how China pivots in this world," Bob Moritz, global chairman of PricewaterhouseCoopers, told Reuters in Davos.

"Will they be more regional or global in their mindset and, more importantly, in their negotiations? It's something we are going to have to watch over the next 12 months."

Fears of a hard economic landing in China roiled global markets during last year's WEF meeting.

Those concerns have eased but the International Monetary Fund warned on Monday about ongoing risks to the Chinese economy, including its high reliance on government spending, record lending by state banks and an overheating property market.

Xi tried to send a reassuring message, saying the economy had entered a "new normal" driven by household consumption. Despite a sluggish global economy, he said China's economy was likely to have grown by 6.7 percent in 2016.

But some economists in Davos remain cautious.

"China is still one of the biggest risks, and I think the only reason it is not at the top of the list is that the United States has become such a locus of uncertainty," said Kenneth Rogoff, an economist at Harvard University.