China vows to open markets wider. How would that work?

President Xi Jinping’s China is back out front telling foreign companies to come in, sell more, build more, and worry less.

On Sunday at the China Development Forum in Beijing, Premier Li Qiang said China would push for more balanced trade with global partners after a year of tariff fights and trade tension, especially with the United States and the European Union.

This of course comes just after China reported a record $1.2 trillion trade surplus for 2025, even as governments across the world have been complaining about the country’s trade model, specifically its industrial overcapacity, and how much they depend on Chinese supply in key sectors.

Meanwhile, America’s Donald Trump last week postponed a planned trip to Beijing to meet President Xi Jinping because of the Iran war, delaying an attempt to cool tensions between the world’s two biggest economies during what is only a temporary trade truce.

China will be using imports, equal treatment, and market access to calm trade pressure

The annual two-day forum, which ends on Monday, is one of Beijing’s main stages for selling its economic story to foreign business leaders, Chinese officials, economists, and academics.

Pan also pointed out that in December, Jinping added 200 sectors to a list eligible for foreign investment incentives, which include tax breaks and preferential land use, and the targeted areas were advanced manufacturing, modern services, green industries, and other high-tech sectors.

Interestingly though, China’s foreign direct investment fell 5.7% year on year in January to just over 92 billion yuan, or about $13.36 billion, a plunge that actually followed a broader 9.5% decline across 2025. So Beijing is not just talking about openness because it sounds nice. It is doing it because foreign money has been pulling back.

China is defending its trade balance as it re-examines yuan goals and national reserve cuts

At the same forum, central bank governor Pan Gongsheng tried to lower the heat around the trade surplus. In a speech later published by the People’s Bank of China, Pan said:-

“Analysing global economic imbalances requires looking not only at trade in goods but also services, and not only at the current account but also the financial account.”

Pan added that China has the world’s largest goods surplus, but also the largest services deficit.

Pan also said China has “no need and no intention” to gain a trade edge through currency depreciation, saying China’s economy is forecast to reach 175 trillion yuan, or roughly $25.39 trillion, by 2030.

At the same time, a new report from Renmin University’s International Monetary Institute reopened debate over how much foreign exchange firepower China really needs as it tries to push the yuan more deeply into global use.

The report, written by Sun Jiaqi and issued on Friday, said China, which has held the world’s largest forex reserves since February 2006, should consider cutting those holdings to a “moderately ample” level.

The discussion focused in part on U.S. Treasuries and what role those assets should play if the yuan becomes more widely used in trade settlement and as a store of value. Sun wrote, “For the yuan’s internationalisation, maintaining moderately ample forex reserves can support the currency.”

Sun then added, “That said, a gradual reduction will be inevitable, once the yuan matures and becomes more adopted globally as a medium of settlement and storage of value, supported by a large circulation abroad.”

The report went further still: “At that point, China may no longer need to hold excessive foreign currency assets as a precaution, since the yuan can replace many of the roles once played by foreign reserves. Amid dedollarization and rising geopolitical concerns, China needs to optimise its reserve structure for financial security and for long-term development,” it said.