US-China trade row not a threat to world econ­omy: Mnuchin

Kuwait Times - - Business -

NUSA DUA: US Trea­sury Sec­re­tary Steven Mnuchin pushed back yes­ter­day against warn­ings that Wash­ing­ton’s trade fight with China im­per­ils the world econ­omy, say­ing that push­ing Bei­jing to open up will be good for all. The IMF has warned this week at an­nual meet­ings in Bali that the es­ca­lat­ing USChina trade con­fronta­tion would hob­ble global eco­nomic growth, as the fund low­ered its fore­casts for this year and next.

But Mnuchin told re­porters on the In­done­sian re­sort is­land that Pres­i­dent Don­ald Trump’s drive to pun­ish China with tar­iffs to en­cour­age it to adopt fairer trade prac­tices would have the op­po­site af­fect.

“Our ob­jec­tive with China is very clear: it’s to have a more bal­anced trad­ing re­la­tion­ship,” Mnuchin said. “I think that if we are suc­cess­ful, this is very good for US com­pa­nies, US work­ers, Euro­peans, Ja­pan, all of our other al­lies, and good for China.”

Mnuchin said, how­ever that the IMF’s warn­ings were “all the more rea­son for China to be in­cented to ad­dress these is­sues with us”.

The IMF Tues­day cut its out­look for global GDP growth by 0.2 per­cent­age points to 3.7 per­cent for 2018 and 2019, say­ing that “every­one is go­ing to suf­fer” from a clash be­tween the world’s two big­gest economies.

Ten­sions have soared in re­cent months with Don­ald Trump’s ad­min­is­tra­tion rolling out bil­lions of dol­lars in tar­iffs against China in a bid to tackle its trade deficit and rein in what Wash­ing­ton views as un­ac­cept­able trade prac­tices by the Asian gi­ant.

“Our ob­jec­tive is to in­crease ex­ports and have a more bal­anced, fair re­la­tion­ship where our com­pa­nies can do busi­ness there on terms that are sim­i­lar to how they can do busi­ness (in the US),” Mnuchin said. “(A) free fair and re­cip­ro­cal re­la­tion­ship.” At­ten­tion has be­gun to turn to­ward hopes that Trump and Chi­nese Pres­i­dent Xi Jin­ping could meet on the side­lines of the G-20 sum­mit next month in Ar­gentina and bury the hatchet with some sort of agree­ment.

“I don’t think any de­ci­sion has been made in re­gards to a meet­ing,” Mnuchin said. “To the ex­tent that we can make progress to­ward a meet­ing, I would en­cour­age that and that’s some­thing we are hav­ing dis­cus­sions about. “But for the mo­ment, there’s no pre­con­di­tions. Trea­sury Sec­re­tary Steven Mnuchin said Fri­day the US econ­omy re­mained strong and this week’s de­cline in the stock mar­ket was “just a nat­u­ral cor­rec­tion.”

Stocks crash

Af­ter two days of sharp drops in US and global stock mar­kets over fears of ris­ing in­ter­est rates and the US trade con­flicts, Mnuchin said in an in­ter­view on CNBC that mar­kets tended to go “too far in both di­rec­tions” and then would have to cor­rect.

But he said it was a “good thing” that Wall Street was poised to re­cover on Fri­day. He was speak­ing on the side­lines of the In­ter­na­tional Mone­tary Fund an­nual meet­ing in Bali, In­done­sia.

Af­ter an un­usu­ally volatile day in which stocks dipped in and out of the red, Wall Street’s main in­dices closed up solidly for the day but, with ear­lier losses, were all still down about four per­cent for the week. In­vestors also were watch­ing the start of cor­po­rate earn­ings sea­son, with ma­jor banks post­ing pos­i­tive quar­terly re­sults on Fri­day morn­ing.

An­a­lysts said third-quar­ter earn­ings could re­veal the ex­tent to which US Pres­i­dent Don­ald Trump’s trade con­flicts might have dented prof­its.

Mnuchin also down­played con­cerns about Trump’s re­peated and ag­gres­sive at­tacks on the US Fed­eral Re­serve this week, say­ing Trump “re­spects the in­de­pen­dence of the Fed.”

Pow­ell do­ing a ‘great job’

Trump has by turns called the Fed “crazy” and “loco” and said it was be­ing “too ag­gres­sive in rais­ing rates,” blam­ing the in­sti­tu­tion for the mar­ket de­clines that saw the bench­mark Dow Jones In­dus­trial Av­er­age lose nearly 1,400 points in two days.

“The pres­i­dent’s been clear. He likes low in­ter­est rates. I think that’s re­ally what it was about,” Mnuchin said, adding that Fed chair­man Jerome Pow­ell was “do­ing a great job.” “I think the fun­da­men­tals are still very strong. The US econ­omy is strong, US earn­ings are strong. So I see this as just a nat­u­ral cor­rec­tion af­ter the mar­kets were up a lot.” Pow­ell in the past has brushed off Trump’s taunts, say­ing po­lit­i­cal in­de­pen­dence was in cen­tral bankers’ “DNA.” De­spite Trump’s at­tacks on the cen­tral bank, econ­o­mists say that, with un­em­ploy­ment at its low­est level in 48 years and monthly job cre­ation hold­ing steady, the Fed is likely to stick to its cur­rent course of rate hikes, with a fourth in­crease ex­pected in De­cem­ber, and three or four in 2019.

Some Fed pol­i­cy­mak­ers who in Jan­uary will take a turn as vot­ing mem­bers of the rate-set­ting Fed­eral Open Mar­ket Com­mit­tee have be­gun to send more hawk­ish sig­nals, putting them in­creas­ingly at odds with Trump.

—AFP

NEW YORK: In this file photo, a man walks past a Chase sign at the com­pany’s Man­hat­tan head­quar­ters in New York City.

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