US-China trade row not a threat to world economy: Mnuchin
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.”
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.
NEW YORK: In this file photo, a man walks past a Chase sign at the company’s Manhattan headquarters in New York City.