Tag Archives: Xi Jinping

Trump-Xi meet, a turning point in global trade war?

FILE PHOTOS: Republican presidential nominee Donald Trump (L) holds a rally with supporters in Council Bluffs, Iowa, September 28, 2016 and Chinese President Xi Jinping waits for leaders to arrive at a summit in Shanghai May 21, 2014. REUTERS/Jonathan Ernst/Aly Song/File Photos

By Philip Blenkinsop

BRUSSELS (Reuters) – Will U.S. President Donald Trump’s much-heralded meeting with Chinese counterpart Xi Jinping in Argentina on Saturday lead to an easing of the Sino-U.S. trade conflict?

That has been the main question of financial and commodity markets leading up to the G20 summit in Buenos Aires. The answer is likely to steer investors at the start of the coming week.

Signals leading up to the meeting were at best mixed.

“I think we’re very close to doing something with China, but I don’t know that I want to do it,” Trump said as he set out on his journey from the White House.

The state-run China Daily newspaper said any deal was unlikely to be a comprehensive solution to the impasse due to “diverging demands and agendas”.

Economists at UBS expressed hope that a positive message could at least emerge, with a path towards resolution sometime next year, but that recent U.S. actions and statements had tempered their optimism.

ING was downbeat on a breakthrough coming soon, adding that two sides remained far apart on the extent to which China’s trade surplus with the United States could be reduced.

ING Bank forecasts that global trade growth will slow from 2.6 percent this year to 1.3 percent in 2019, the weakest rate since 2009, when the global financial crisis was at its height.

The estimate is based on an intensified U.S.-China trade war in which Washington increases tariffs on $200 billion of products to 25 percent in January from 10 percent now and then targets the $267 billion of Chinese exports not already subject to measures.

Without that, global trade growth could be unchanged at 2.6 percent. However, if Trump also decides to hike import duties on cars, that growth would slump to 0.5 percent next year, ING says.

Trump has threatened for months to impose auto tariffs, notably those made in Europe, although he has pledged to refrain from doing so for the European Union and Japan as long as it makes constructive progress in trade talks with the pair.

However, Trump reignited speculation on Wednesday by saying new auto tariffs were “being studied” and asserting they could prevent jobs cuts such as the layoffs and plant closures announced by General Motors Co.

Economists at Citi believe any tariffs would apply to finished vehicles but not to auto parts and the principal question is not if, but when, they will be unveiled.

As speculation has intensified, top executives from German carmakers Volkswagen, BMW and Daimler, previous targets of Trump’s criticism, are set to visit the White House next week.

OPEC CUTS, U.S. JOBS SPIKE?

Once markets have absorbed the fruits of the Trump-Xi exchange, investors may shift focus to at least two events at the end of the week.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies meet on Dec. 6-7 and are expected to discuss a possible production cut. Oil prices have fallen by more than 20 percent in November, to make it the biggest monthly drop in a decade.

The United States will also report its widely watched monthly jobs report on Friday.

Economists polled by Reuters forecast that the unemployment rate will hold at a 49-year low of 3.7 percent and that year-on-year wage growth will also match the 3.1 percent of October, itself a nine-and-a-half-year high.

The figures, if confirmed, should make it a near-certainty that the Federal Reserve will raise interest rates for a fourth time this year at its Dec. 18-19 meeting, even as its chairman Jerome Powell signals a more cautious approach on future rate hikes next year.

“While sentiment may be a bit gloomy after the fallout from G20 meeting the more positive tone to the U.S. macro story could improve spirits as we move through the week,” said James Knightley, chief international economist at ING.

(Reporting by Philip Blenkinsop; Editing by Richard Balmforth)

Frost thaws in U.S.-China ties ahead of G20 meeting

FILE PHOTO: U.S. and Chinese flags are placed for a joint news conference by U.S. Secretary of State Mike Pompeo and Chinese Foreign Minister Wang Yi at the Great Hall of the People in Beijing, China June 14, 2018. REUTERS/Jason Lee/File Photo

By David Brunnstrom and John Geddie

WASHINGTON/SINGAPORE (Reuters) – The United States and China will hold a delayed top-level security dialogue on Friday, the latest sign of a thaw in relations, as China’s vice president said Beijing was willing to talk with Washington to resolve their bitter trade dispute.

The resumption of high-level dialogue, marked by a phone call last week between Presidents Donald Trump and Xi Jinping, comes ahead of an expected meeting between the two at the G20 summit in Argentina starting in late November.

It follows months of recriminations spanning trade, U.S. accusations of Chinese political interference, the disputed South China Sea and self-ruled Taiwan.

China and the United States have both described last week’s telephone call between Xi and Trump as positive. Trump predicted he’d be able to make a deal with China on trade.

In a concrete sign of the unfreezing, the U.S. State Department said Secretary of State Mike Pompeo, Defense Secretary Jim Mattis, Chinese politburo member Yang Jiechi and Defense Minister Wei Fenghe will take part in diplomatic and security talks later this week in Washington.

China said last month the two sides had initially agreed “in principle” to hold the second round of diplomatic security talks in October but they were postponed at Washington’s request amid rising tensions over trade, Taiwan and the South China Sea.

Mattis had been due to hold talks with Wei in Beijing in October, but those plans were upended after Washington imposed sanctions on China’s People’s Liberation Army for buying weapons from Russia.

Mattis did meet Wei in Singapore on Oct. 18 and told him that the world’s two largest economies needed to deepen high-level ties to reduce the risk of conflict.

Speaking in Singapore on Tuesday, Chinese Vice President Wang Qishan, who is close to Xi, reiterated China’s readiness to hold discussions and work with the United States to resolve trade disputes as the world’s two largest economies stand to lose from confrontation.

“Both China and the U.S. would love to see greater trade and economic cooperation,” Wang told the Bloomberg New Economy Forum in Singapore.

“The Chinese side is ready to have discussions with the U.S. on issues of mutual concern and work for a solution on trade acceptable to both sides,” he said.

“The world today faces many major problems that require close co-operation between China and the United States,” Wang said.

Wang echoed comments made by Xi on Monday at a major import fair in Shanghai that Beijing will embrace greater openness.

Trump has railed against China over intellectual property theft, entry barriers to U.S. business and a gaping trade deficit, which U.S. data showed reached a record $40.2 billion in September.

The trade war, which has seen both sides impose tariffs on billions of dollars worth of the other’s imports, is beginning to hurt China’s economy and has battered Chinese shares and the yuan currency.

It has also brought purchases of U.S. soybeans by China to a virtual standstill. Soybeans are the largest U.S. agricultural export to China.

Jim Sutter, CEO of the U.S. Soybean Export Council, told Reuters on the sidelines of the Shanghai import fair that both countries understood the need to maintain their relationship.

“I think both sides are optimistic … more optimistic after the call last week that took place, that some kind of a solution can be reached,” he said.

(Reporting by David Brunnstrom and John Geddie; Additional reporting by Tom Daly and Michael Martina in Shanghai; Writing by Ben Blanchard; Editing by Tony Munroe and Neil Fullick)

North Korea, China discuss ‘true peace’, denuclearization

North Korean leader Kim Jong Un and Chinese President Xi Jinping raise a toast in Beijing, China, in this undated photo released June 20, 2018 by North Korea's Korean Central News Agency. KCNA via REUTERS

By Christine Kim and Christian Shepherd

SEOUL/BEIJING (Reuters) – North Korea’s Kim Jong Un and Chinese President Xi Jinping came to an understanding on issues discussed at a summit of the two leaders, including denuclearization of the Korean peninsula, the North’s state media said on Wednesday.

Kim and Xi assessed the historic meeting Kim had with U.S. President Donald Trump in Singapore last week and exchanged opinions on ways to resolve the issue of denuclearization, Korean Central News Agency (KCNA) said.

The North Korean leader also promised during a meeting with Xi in Beijing to cooperate with Chinese officials to secure “true peace” in the process of “opening a new future” on the Korean peninsula, it said.

Xi told Kim the neighbors’ joint efforts could definitely ensure peace and stability on the Korean peninsula, China’s official Xinhua news agency said.

“I have faith that, with the joint efforts of China and North Korea, our relationship can definitely benefit both countries and both peoples,” he said, during a meeting at Beijing’s Diaoyutai state guest house.

Kim told Xi that previously China and North Korea had helped each other out like family members. “General Secretary comrade Xi Jinping has shown us touching and familial support and concern,” he said, according to Xinhua.

Kim wrapped up his two-day trip to Beijing on Wednesday with a visit to an agricultural sciences exhibition and the Beijing subway command center, Xinhua added.

The visit follows his Singapore summit, where Kim and Trump reaffirmed a commitment to work toward complete denuclearization of the Korean peninsula.

Trump surprised officials in South Korea and the United States after that meeting by saying he would end “provocative” joint U.S.-South Korean military exercises.

The United States and South Korea said they had agreed to suspend a joint military exercise set for August, although decisions regarding subsequent drills have not yet been made.

On Wednesday, South Korean Foreign Minister Kang Kyung-hwa said the decision to suspend the exercise could be reconsidered, based on future developments with North Korea.

“I think we’ve made it clear this is a goodwill gesture to strengthen dialogue momentum,” Kang said.

“It’s not irreversible. They could come back if the dialogue loses speed, or if North Korea doesn’t live up to its denuclearization commitment,” she said.

Kim is on his third visit to China this year. Xi offered high praise to the North Korean leader on Tuesday for the “positive outcome” of last week’s summit with Trump.

KCNA also reported that Xi said relations between China and North Korea had reached a new level of development since Kim’s first visit in March and that the pacts by the two leaders were being carried out “one-by-one”.

Kim also told Xi he was willing to bolster friendship and cooperation, it said.

It was widely expected that Kim would visit Beijing to brief Xi on his summit with Trump, which included Pyongyang agreeing to hand over the remains of troops missing from the 1950-53 Korean War.

Two U.S. officials told Reuters on Tuesday North Korea could start that process within the next few days.

(Reporting by Christine Kim; Additional reporting by Joori Roh and Joyce Lee in SEOUL and Idrees Ali in WASHINGTON; Editing by Paul Tait and Clarence Fernandez)

Xi warns Taiwan will face ‘punishment of history’ for separatism

Chinese President Xi Jinping speaks at the closing session of the National People's Congress (NPC) at the Great Hall of the People in Beijing, China March 20, 2018.

By Philip Wen and Ben Blanchard

BEIJING (Reuters) – Chinese President Xi Jinping told self-ruled Taiwan on Tuesday that it would face the “punishment of history” for any attempt at separatism, offering his strongest warning yet to the island claimed by China as its sacred territory.

In response, the government of Taiwan, one of China’s most sensitive issues and a potentially dangerous military flashpoint, said it hoped China could “break free” of the old clichés of threats and force.

China’s hostility toward Taiwan has risen since the 2016 election of President Tsai Ing-wen, a member of the island’s pro-independence Democratic Progressive Party.

China suspects Tsai wants to push for formal independence, which would cross a red line for Communist Party leaders in Beijing, though Tsai has said she wants to maintain the status quo and is committed to ensuring peace.

China has been infuriated by U.S. President Donald Trump’s signing into law legislation last week that encourages the United States to send senior officials to Taiwan to meet Taiwan counterparts, and vice versa.

The United States does not have formal ties with Taiwan but is required by law to help it with self-defense and is the island’s primary source of weapons.

China will push for the “peaceful reunification of the motherland” and work for more Taiwanese to enjoy the opportunities of its development, Xi told the 3,000-odd delegates to the annual session of parliament.

“It is a shared aspiration of all Chinese people and in their basic interests to safeguard China’s sovereignty and territorial integrity and realize China’s complete reunification,” Xi said in a speech at the end of the session.

“Any actions and tricks to split China are doomed to failure and will meet with the people’s condemnation and the punishment of history,” he added, to loud applause.

China had the will, confidence and ability to defeat any separatist activity, Xi said.

“The Chinese people share a common belief that it is never allowed and it is absolutely impossible to separate any inch of our great country’s territory from China.”

In Taiwan, the China policy-making Mainland Affairs Council said the government was firm in its conviction to protect Taiwan’s “sovereign dignity” and the well-being of its people.

“We also hope that mainland China’s leaders, at this time of entering into a new administration period, can break free of clichéd thinking of strong intimidation,” it added.

In a visit likely to further irritate China, U.S. Deputy Assistant Secretary of State Alex Wong will be in Taiwan this week, the island’s foreign ministry said.

PATRIOTIC SPIRIT

China has also been worried about independence activists in the former British colony of Hong Kong following big street protests there in 2014 calling for universal suffrage.

Xi said China would uphold Hong Kong’s high degree of autonomy, but would also seek to increase “national consciousness and patriotic spirit” in the financial center.

Taiwan has shown no interest in being run by China, and has accused China of not understanding how democracy works, pointing out that Taiwan’s people have the right to decide its future.

The new U.S. law on Taiwan adds to strains between China and the United States over trade, as Trump has enacted tariffs and called for China to reduce its huge trade imbalance with the United States, even while Washington has sought Beijing’s help to resolve tension with North Korea.

Taiwan has thanked the United States for the law and its support, but its foreign ministry said on Monday there were no plans for any senior leaders, such as the president, to visit the United States.

While stepped-up Chinese military exercises around Taiwan over the past year have rattled the island, Xi reiterated China’s assertion that its rise was not a threat to any country, though China considers Taiwan to be merely a Chinese province not a nation.

“Only those who are in the habit of threatening others will see everyone else as a threat,” Xi said.

(Additional reporting by Stella Qiu and Christian Shepherd, and Twinnie Siu and Fabian Hamacher in TAIPEI; Writing by Ben Blanchard; Editing by Robert Birsel and Clarence Fernandez)

China says ‘dual suspension’ proposal still best for North Korea

China says 'dual suspension' proposal still best for North Korea

BEIJING (Reuters) – China said on Thursday a “dual suspension” proposal to handle North Korea was still the best option, after U.S. President Donald Trump said he and Chinese President Xi Jinping had rejected a “freeze for freeze” agreement.

North Korea’s rapid progress in developing nuclear weapons and missiles has fueled a surge in regional tension and U.N.-led sanctions appear to have failed to bite deeply enough to change its behavior.

China and Russia have proposed that the United States and South Korea stop major military exercises in exchange for North Korea halting its weapons programs.

China formally calls the idea the “dual suspension” proposal.

Speaking on his return from Asia on Wednesday, Trump said he and Xi had rejected a “freeze for freeze” agreement, but it was not clear if he was referring to the “dual suspension” idea, which China’s foreign minister announced in March.

Asked how China understood Trump’s remarks, and if he agreed with Trump’s characterization of what Trump said he agreed with Xi, Chinese Foreign Ministry spokesman Geng Shuang said only through talks that addressed all sides legitimate security concerns could there be a peaceful resolution.

“We believe that the ‘dual suspension’ proposal is the most feasible, fair and sensible plan in the present situation,” Geng told a daily news briefing.

“Not only can it relieve the present tense situation, it can also resolve all parties most pressing security concerns, and provide an opportunity and create conditions to resume talks, and find a breakthrough point to get out of trouble,” he added.

The “dual suspension” is just a first step and not the end point, Geng said.

“We hope that all sides can conscientiously treat and proactively consider China’s proposal, and at the same time we welcome relevant parties to put forward proposals that can benefit the promotion of a peaceful resolution for the peninsula nuclear issue.”

North Korea says it needs to develop its weapons to protect itself from what it sees as U.S. aggression. It sees U.S.-South Korean military exercises as preparations for invasion.

South Korea and the United States, which has about 28,000 troops in South Korea, say their exercises are “defensive in nature”.

(Reporting by Ben Blanchard; Editing by Robert Birsel)

In Beijing, Trump presses China on North Korea and trade

In Beijing, Trump presses China on North Korea and trade

By Steve Holland and Christian Shepherd

BEIJING (Reuters) – U.S. President Donald Trump pressed China to do more to rein in North Korea on Thursday and said bilateral trade had been unfair to the United States, but praised President Xi Jinping’s pledge that China would be more open to foreign firms.

On North Korea’s nuclear and missile programs, Trump said “China can fix this problem quickly and easily”, urging Beijing to cut financial links with North Korea and also calling on Russia to help.

Trump was speaking alongside Xi in the Chinese capital to announce the signing of about $250 billion in commercial deals between U.S. and Chinese firms, a display that some in the U.S. business community worry detracts from tackling deep-seated complaints about market access in China.

Xi said the Chinese economy would become increasingly open and transparent to foreign firms, including those from the United States, and welcomed U.S. companies to participate in his ambitious “Belt and Road” infrastructure-led initiative.

Trump made clear that he blamed his predecessors, not China, for the trade imbalance, and repeatedly praised Xi, calling him “a very special man”.

“But we will make it fair and it will be tremendous for both of us,” Trump said.

Xi smiled widely when Trump said he does not blame China for the deficit and also when Trump said Xi gets things done.

“Of course there are some frictions, but on the basis of win-win cooperation and fair competition, we hope we can solve all these issues in a frank and consultative way,” Xi said.

“Keeping opening up is our long-term strategy. We will never narrow or close our doors. We will further widen them,” he said. China would also offer a more fair and transparent environment for foreign firms, including U.S. ones, Xi said.

MODEST PROGRESS

Trump is pressing China to tighten the screws further on North Korea and its development of nuclear weapons in defiance of U.N. sanctions. At least modest progress is hoped for, although there are no immediate signs of a major breakthrough, a U.S. official said earlier.

Referring to Xi, Trump said: “I do believe there’s a solution to that, as do you.”

Xi reiterated that China would strive for the denuclearisation of the Korean peninsula but offered no hint that China would change tack on North Korea, with which it fought side-by-side in the 1950-53 Korean war against U.S.-led forces.

“We are devoted to reaching a resolution to the Korean peninsula issue through dialogue and consultations,” Xi said.

Briefing reporters after the talks, U.S. Secretary of State Rex Tillerson said Trump told Xi: “You’re a strong man, I’m sure you can solve this for me.”

Tillerson said both leaders agreed they could not accept a nuclear-armed North Korea but he acknowledged they had some differences over tactics and timing.

Tillerson pointed out that Trump, in a speech in Seoul, had “invited the North Koreans to come to the table,” in line with the Chinese desire for a negotiated solution. He added, however, that Trump was prepared for a “military response” if he deemed the threat serious enough, but “that’s not his first choice”.

“We are going to work hard on diplomatic efforts as well,” he said, but did not elaborate.

In a show of the importance China puts on Trump’s first official visit, Thursday’s welcoming ceremony outside Beijing’s Great Hall of the People overlooking Tiananmen Square was broadcast live on state television – unprecedented treatment for a visiting leader.

Earlier on Thursday, Xi said he had a deep exchange of views with Trump and reached consensus on numerous issues of mutual concern.

“For China, cooperation is the only real choice, only win-win can lead to an even better future,” he said.

Xi said China and the United States strengthened high-level dialogue on all fronts over the past year and boosted coordination on major international issues, such as the Korean peninsula and Afghanistan.

“Relations between China and the United States are now on a new historical starting point,” Xi said.

Trump and Xi hit it off at their first meeting in April at Trump’s Mar-a-Lago resort in Florida and continued their “bromance” on Wednesday with an afternoon of sightseeing together with their wives. However, divisions persist over trade and North Korea.

And while Xi is riding high after consolidating power at a twice-a-decade Communist Party Congress last month, Trump comes to China saddled with low public approval ratings and dogged by investigations into Russian links to his election campaign.

‘HORRIBLE’ TRADE SURPLUS

Trump has ratcheted up his criticism of China’s massive trade surplus with the United States – calling it “embarrassing” and “horrible” last week – and has accused Beijing of unfair trade practices.

For its part, China says U.S. restrictions on Chinese investment in the United States and on high-tech exports need to be addressed.

Several corporate chief executives were in Beijing as part of a delegation led by U.S. Commerce Secretary Wilbur Ross, with General Electric and semiconductor maker Qualcomm Inc among those announcing billions of dollars in sales to China. [L3N1NF2IA]

But Qualcomm’s agreement to sell $12 billion worth of components to three Chinese mobile phone makers over three years is non-binding, and critics say such public announcements are sometimes more show than substance.

“This shows that we have a strong, vibrant bilateral economic relationship, and yet we still need to focus on leveling the playing field because U.S. companies continue to be disadvantaged doing business in China,” said William Zarit, chairman of the American Chamber of Commerce in China.

Trump railed against China’s trade practices during the 2016 U.S. presidential campaign and threatened to take action once in office. But he has since held back on any major trade penalties, making clear he was doing so to give Beijing time to make progress reining in North Korea.

A U.S. official said both sides were “in sync” about wanting to minimize friction during the visit and recreate the positive tone of the April summit.

Trump was not expected to put much emphasis in his talks with Xi on thorny issues such as the disputed South China Sea and self-ruled Taiwan, claimed by China as its own, although the leaders’ aides may deal with those matters privately, the official told Reuters, speaking on condition of anonymity.

China has repeatedly pushed back at suggestions it should be doing more to rein in North Korea, which does about 90 percent of its trade with China, saying it is fully enforcing U.N. sanctions and that everyone has a responsibility to lower tension and get talks back on track.

(This story was refiled to restore dropped word in paragraph 16.)

(Additional reporting by Matt Spetalnick, Matthew Miller, Philip Wen and John Ruwitch; Writing by Ben Blanchard and Tony Munroe; Editing by Clarence Fernandez and Nick Macfie)

Trump expected to pressure China’s Xi to rein in North Korea: officials

Trump expected to pressure China's Xi to rein in North Korea: officials

By Steve Holland

WASHINGTON (Reuters) – U.S. President Donald Trump is expected to pressure China’s president when they meet next month in Beijing to do more to rein in North Korea out of a belief that Xi Jinping’s consolidation of power should give him more authority to do so.

Trump leaves Nov. 3 on a trip that will take him to Japan, South Korea, China, Vietnam and the Philippines. It will be his first tour of Asia since taking power in January and one with a major priority: Preventing the standoff with North Korea from spiraling out of control.

Xi is immersed in a Communist Party Congress expected to culminate in him consolidating his control and potentially retaining power beyond 2022, when the next congress takes place.

Trump believes that Xi should have even more leverage to work on the North Korea problem.

“The president’s view is you have even less of an excuse now,” said one official. “He’s not going to step lightly.”

Trump wants to gain some serious cooperation from China to persuade Pyongyang to either change its mind or help deprive it of so much resources that it has no choice but to alter its behavior, the official said.

Trump has heaped praise on Xi in recent weeks in hopes of gaining Chinese cooperation and has held back from major punitive trade measures.

In an interview with Fox Business Network’s Maria Bartiromo, Trump said he wants to “keep things very, very low key” with Xi until the Chinese leader emerges from the party congress.

“I believe he’s got the power to do something very significant with respect to North Korea. We’ll see what happens. Now with that being said, we’re prepared for anything. We are so prepared, like you wouldn’t believe,” Trump said in the interview, to air on Sunday.

Trump has traded bitter insults with North Korean leader Kim Jong Un, using his speech at the United Nations General Assembly last month to dismiss Kim as a “rocket man” on a suicide mission for his repeated nuclear tests and ballistic missile launches. He said if threatened, the United States would “totally destroy” North Korea.

Kim in recent weeks said the United States would face an “unimaginable strike” from North Korea if provoked.

CIA chief Mike Pompeo said on Thursday that North Korea could be only “months” away from gaining the ability to hit the United States with nuclear weapons.

(Additional reporting by David Brunnstrom; Editing by James Dalgleish)

China’s Xi lays out vision for ‘new era’ led by ‘still stronger’ Communist Party

Chinese President Xi Jinping arrives for the opening of the 19th National Congress of the Communist Party of China at the Great Hall of the People in Beijing, China October 18, 2017. REUTERS/Jason Lee

By Christian Shepherd and Stella Qiu

BEIJING (Reuters) – Chinese President Xi Jinping on Wednesday laid out a confident vision for a more prosperous nation and its role in the world, stressing the importance of wiping out corruption and curbing industrial overcapacity, income inequality and pollution.

Opening a critical Communist Party congress, Xi pledged to build a “modern socialist country” for a “new era” that will be proudly Chinese and steadfastly ruled by the party but open to the world.

Although his wide-ranging address made clear there were no plans for political reform, Xi said China’s development had entered a “new era”, using the phrase 36 times in a speech that ran nearly 3-1/2 hours.

“With decades of hard work, socialism with Chinese characteristics has crossed the threshold into a new era,” Xi said.

The twice-a-decade event, a weeklong, mostly closed-door conclave, will culminate in the selection of a new Politburo Standing Committee to rule China’s 1.4 billion people for the next five years, with Xi expected to consolidate his control and potentially retain power beyond 2022, when the next congress takes place.

The 64-year-old Xi, widely regarded as the most powerful Chinese leader since Mao Zedong, spoke to more than 2,000 delegates in Beijing’s cavernous, red-carpeted Great Hall of the People, including 91-year-old former president Jiang Zemin. Security was tight on a rainy, smoggy day in the capital.

(For multimedia coverage, click http://reut.rs/2gN2YqY)

As expected, the speech was heavy on aspiration and short on specific plans.

On the economy, Xi said China would relax market access for foreign investment, expand access to its services sector and deepen market-oriented reform of its exchange rate and financial system, while at the same time strengthening state firms.

During Xi’s first term, China disappointed many investors who had expected it to usher in more market-oriented reforms, especially in the debt-laden state sector.

“If Xi gets the political mandate that he is expected to out of the congress, then my hope is that the state sector reforms actually get done,” Damien Ma, fellow and associate director at U.S. thinktank the Paulson Institute, told the Reuters Global Markets Forum.

“If not, then I would also revise my assessment of the state of reforms in China. There have been talks in Beijing that the state sector will be a focus after the 19th party congress, so we need to see.”

The European Union Chamber of Commerce in China said it welcomed commitments to open wider the door and treat all companies equally, but said European companies operating in China continued to suffer from “promise fatigue”.

“The only cure for this is promise implementation,” it said in a statement.

In what was probably an indirect reference to U.S. President Donald Trump’s “America First” policy, Xi promised that China would be fully engaged with the world, and reiterated pledges to tackle climate change. Trump this year opted to withdraw the United States from the Paris climate pact.

“No country can alone address the many challenges facing mankind; no country can afford to retreat into self-isolation,” Xi told the delegates, among them Buddhist monks, Olympic medallists, farmers and at least one astronaut.

Xi set bold long-term goals for China’s development, envisioning it as a “basically” modernised socialist country by 2035, and a modern socialist “strong power” with leading influence on the world stage by 2050.

But he signalled there would be no significant political reforms, calling China’s system the broadest, most genuine, and most effective way to safeguard the interests of the people.

Xi has overseen a sweeping crackdown on civil society, locking up rights lawyers and dissidents and tightening internet controls as he has sought to revitalise the Communist Party and its place in contemporary China.

“We should not just mechanically copy the political systems of other countries,” he said. “We must unwaveringly uphold and improve party leadership and make the party still stronger.”

FIRM ON GRAFT, TAIWAN

Xi praised the party’s successes, particularly his high-profile anti-graft campaign, in which more than a million officials have been punished and dozens of former senior officials jailed, saying it would never end as corruption was the “gravest threat” the party faces.

On self-ruled Taiwan, claimed by Beijing as its own, Xi said China would never allow the island to separate from China, adding that China would strive to fully transform its armed forces into a world-class military by the mid-21st century.

He made no mention of neighbouring North Korea, which has angered Beijing with repeated nuclear and ballistic missile tests in defiance of U.N. sanctions. Pyongyang sent a congratulatory message ahead of the meeting.

Xi has consolidated power swiftly since assuming the party leadership in 2012, locking up rivals for corruption, restructuring the military and asserting China’s rising might on the world stage.

Focus at the congress will be on how Xi plans to use his expanded authority, and moves to enable him to stay on in a leadership capacity after his second term ends in 2022.

That could include resurrecting the position of party chairman, a title that would put him on par with Mao, the founding father of modern China.

“In all aspects he is on the right track to be our next Chairman Mao,” Su Shengcheng, a delegate from the northwestern province of Qinghai, told Reuters. “He will lead the party and Central Committee to continue its way to success.”

As with other major set-piece events in the capital, Beijing has been blanketed with security in the run-up to the congress, with long queues of passengers at some subway stations waiting to go through metal detectors and be patted down.

Large red banners plastered around Beijing trumpet the congress, while censors have stepped up already tight monitoring of the internet.

Tencent Holdings Ltd’s WeChat, China’s top social media platform with more than 960 million users, said late on Tuesday that “system maintenance” would render users unable to alter profile pictures, nicknames and tag lines until month-end.

The disabled features are sporadically used to show solidarity for popular social and political causes.

(Additional reporting by Philip Wen, Pei Li, Michael Martina, Cate Cadell, Kevin Yao, Yawen Chen, Elias Glenn and Se Young Lee; Writing by Ben Blanchard and Tony Munroe; Editing by Nick Macfie and Clarence Fernandez)

‘Lips and teeth’ no more as China’s ties with North Korea fray

FILE PHOTO: North Korean soldiers chat as they stand guard behind national flags of China (front) and North Korea on a boat anchored along the banks of Yalu River, near the North Korean town of Sinuiju, opposite the Chinese border city of Dandong, June 10, 2013. REUTERS/Jacky Chen

By Philip Wen and Christian Shepherd

BEIJING (Reuters) – When Kim Jong Un inherited power in North Korea in late 2011, then-Chinese president Hu Jintao was outwardly supportive of the untested young leader, predicting that “traditional friendly cooperation” between the countries would strengthen.

Two years later, Kim ordered the execution of his uncle Jang Song Thaek, the country’s chief interlocutor with China and a relatively reform-minded official in the hermetic state.

Since then, ties between the allies have deteriorated so sharply that some diplomats and experts fear Beijing may become, like Washington, a target of its neighbor’s ire.

While the United States and its allies – and many people in China – believe Beijing should do more to rein in Pyongyang, the acceleration of North Korea’s nuclear and missile capabilities has coincided with a near-total breakdown of high-level diplomacy between the two.

Before retiring this summer, China’s long-time point man on North Korea, Wu Dawei, had not visited the country for over a year. His replacement, Kong Xuanyou, has yet to visit and is still carrying out duties from his previous Asian role, traveling to Pakistan in mid-August, diplomats say.

The notion that mighty China wields diplomatic control over impoverished North Korea is mistaken, said Jin Canrong, an international relations professor at Beijing’s Renmin University.

“There has never existed a subordinate relationship between the two sides. Never. Especially after the end of the Cold War, the North Koreans fell into a difficult situation and could not get enough help from China, so they determined to help themselves.”

A famine in the mid-1990s that claimed anywhere from 200,000 to three million North Koreans was a turning point for the economy, forcing private trade on the collectivized state. That allowed the North a degree of independence from outside aid and gave credence to the official “Juche” ideology of self-reliance.

AVOID CHAOS

China fought alongside North Korea during the 1950-53 Korean War, in which Chinese leader Mao Zedong lost his eldest son, and Beijing has long been Pyongyang’s chief ally and primary trade partner.

While their relationship has always been clouded by suspicion and mistrust, China grudgingly tolerated North Korea’s provocations as preferable to the alternatives: chaotic collapse that spills across their border, and a Korean peninsula under the domain of a U.S.-backed Seoul government.

That is also the reason China is reluctant to exert its considerable economic clout, worried that measures as drastic as the energy embargo proposed this week by Washington could lead to the North’s collapse.

Instead, China repeatedly calls for calm, restraint and a negotiated solution.

The North Korean government does not provide foreign media with a contact point in Pyongyang for comment by email, fax or phone. The North Korean embassy in Beijing was not immediately available for comment.

China’s foreign ministry did not respond to a faxed request for comment. It has repeatedly spoken out against what it calls the “China responsibility theory” and insists the direct parties – North Korea, South Korea and the United States – hold the key to resolving tensions.

‘FEUDAL AGES’

Until his death in 2011, North Korean leader Kim Jong Il made numerous entreaties to ensure China would back his preferred son as successor.

While then-President Hu reciprocated, the younger Kim, in his late 20s at the time, began to distance himself from his country’s most powerful ally.

“There’s a lot of domestic politics in North Korea where this young leader who isn’t well-known, he’s not proven yet, especially has to show that he’s not in the pocket of Beijing,” said John Delury of Seoul’s Yonsei University. “I think he made the decision first to keep Hu Jintao and then (current President) Xi Jinping really at bay.”

Within months of coming to power, Kim telegraphed North Korea’s intentions by amending its constitution to proclaim itself a nuclear state. The execution of Jang in 2013 sealed Beijing’s distrust of the young leader.

“Of course the Chinese were not happy,” said a foreign diplomat in Beijing focused on North Korea. “Executing your uncle, that’s from the feudal ages.”

In an attempt to warm ties, Xi sent high-ranking Communist Party official Liu Yunshan to attend the North’s October 2015 military parade marking the 70th anniversary of the founding of the Workers’ Party of Korea.

Liu hand-delivered a letter from Xi praising Kim’s leadership and including congratulations not just from the Chinese Communist Party but Xi’s personal “cordial wishes” in a powerful show of respect.

Xi’s overture has been repaid with increasingly brazen actions by Pyongyang, which many observers believe are timed for maximum embarrassment to Beijing. Sunday’s nuclear test, for example, took place as China hosted a BRICS summit, while in May, the North launched a long-range missile just hours before the Belt and Road Forum, dedicated to Xi’s signature foreign policy initiative.

MISREADING LIPS

Mao Zedong’s description of North Korea’s relationship with China is typically mischaracterised as being as close as “lips and teeth”.

His words are better translated as: “If the lips are gone, the teeth will be cold,” a reference to the strategic importance of the North as a geographical security buffer.

Despite its resentment at the pressure North Korea’s actions have put it under, Beijing refrains from taking too hard a line.

It said little when Kim Jong Un’s half-brother was assassinated in February at Kuala Lumpur’s airport. The half-brother, Kim Jong Nam, had been seen as a potential rival for power in Pyongyang and had lived for years in Beijing, then Macau.

An editorial in China’s influential Global Times warned after Pyongyang’s latest nuclear test that cutting off North Korea’s oil would redirect the conflict to one between North Korea and China.

Zhao Tong, a North Korea expert at the Carnegie-Tsinghua Center in Beijing, said North Korea was deeply unhappy with China’s backing of earlier UN sanctions.

“If China supports more radical economic sanctions that directly threaten the stability of the regime, then it is possible that North Korea becomes as hostile to China as to the United States.”

(This story has been refiled to remove reference to uncle in paragraph 18)

(Reporting by Philip Wen and Christian Shepherd; Editing by Tony Munroe and Lincoln Feast)

Sweeping change in China’s military points to more firepower for Xi

A Chinese paramilitary policeman climbs an obstacle during training in Nanning, Guangxi Zhuang Autonomous Region, China, August 11, 2017. Picture taken August 11, 2017. REUTERS/Stringer

By Philip Wen and Benjamin Kang Lim

BEIJING (Reuters) – China’s military is preparing a sweeping leadership reshuffle, dropping top generals, including two that sources say are under investigation for corruption.

The changes would make room for President Xi Jinping to install trusted allies in key positions at a key party congress that begins on Oct 18.

A list of 303 military delegates to the Communist Party Congress, published by the army’s official newspaper on Wednesday, excluded Fang Fenghui and Zhang Yang, both members of the Central Military Commission. The commission is China’s top military decision-making body.

Reuters reported this week that the 66-year-old Fang, who accompanied Xi to his first meeting with U.S. President Donald Trump in April, is being questioned on suspicion of corruption.

Three sources familiar with the matter said Zhang, the director of the military’s Political Work Department, is also the subject of a probe. China’s Defense Ministry did not respond to a request for comment.

The personnel changes herald a clean sweep of the top-ranking generals heading up the department. All three of Zhang’s deputies – Jia Tingan, Du Hengyan and Wu Changde – were also missing from the list of congress delegates.

“This is a very clear message: they’re out,” said Cheng Li, an expert on Chinese elite politics at the Brookings Institution. “Their political careers have come to an end.”

On Friday, news reports carried by the People’s Liberation Army Daily and the official news agency Xinhua abruptly referred to the navy’s political commissar, Miao Hua, as the Political Work Department director, despite no official announcement of Zhang being replaced in his role.

The department is in charge of imbuing political thought and makes military personnel decisions in a similar vein to the Communist Party’s Organisation Department.

The Political Work Department used to be headed by Xu Caihou, who along with a fellow former vice-chairman of the military commission, Guo Boxiong, was accused of taking bribes in exchange for promotions. Guo was jailed for life last year, while Xu died of cancer in 2015 before he could face trial.

Also among the key omissions from the list published Wednesday were Du Jincai, who was replaced as the military’s anti-corruption chief in March, and Cai Yingting, who left his post as head of the PLA Academy of Military Science in January.

Taking into account officials who are likely to retire, as many as seven of the 11 spots on the military commission may be vacated, strengthening talk in Chinese political circles that the body may be streamlined.

Xi, who is commander-in-chief of China’s armed forces, currently chairs the commission, which also comprises two vice-chairmen and eight committee members.

Two sources familiar with the matter said the commission may be cut down to Xi and four vice-chairmen, doing away with committee members and streamlining reporting lines.

Li, the Brookings expert, said that among those likely to be central to the army’s refreshed leadership were Li Zuocheng, who took over from Fang as chief of the Joint Staff Department last month, Miao and the three commanders of the army’s ground, air and naval forces: Han Weiguo, Ding Laihang and Shen Jinlong.

The fact that all five were newly-appointed this year and none were members of the Communist Party’s 200-odd strong Central Committee, Li said, reflected the extent to which Xi was rejuvenating the leadership as part of his years-long drive to modernize the military and make it more ready for combat.

“This is really a major step from Xi Jinping to consolidate his authority to promote the young, those who have some professional experience,” but are “not corrupted, and certainly not belonging to the factions of Guo Boxiong and Xu Caihou,” he said.

(Reporting by Philip Wen and Benjamin Kang Lim; Editing by Philip McClellan)