‘Win­ter is com­ing’ warns In­done­sia

Every­one stands to lose if trade wars es­ca­late, global bankers and fi­nance min­is­ters told


JUST IN case any of the global cen­tral bankers and fi­nance min­is­ters gath­ered in In­done­sia missed the mes­sage de­liv­ered re­peat­edly this week, the host na­tion said it again on Fri­day: every­one stands to lose if trade wars are al­lowed to es­ca­late.

In­done­sian Pres­i­dent Joko Wi­dodo didn’t men­tion the US or China, the world’s two largest economies, but it was clear who he was talk­ing about in an ad­dress to the ple­nary ses­sion of the In­ter­na­tional Mone­tary Fund and World Bank meet­ings in Bali.

“Lately, it feels like the re­la­tions among the ma­jor economies are be­com­ing more and more like Game of Thrones,” Wi­dodo said in a speech full of ref­er­ences to the HBO se­ries about dy­nas­ties bat­tling for power.

“Are we so busy fight­ing with each other and com­pet­ing against each other that we fail to no­tice the things which are in­creas­ingly threat­en­ing all of us alike, rich and poor, large and small?” he asked.

Poorer and pop­u­lous emerg­ing mar­ket coun­tries like his are among the most vul­ner­a­ble to the fall­out from the on­go­ing Us-sino tar­iff war, and ris­ing US in­ter­est rates that are draw­ing in­vestors away and driv­ing down cur­ren­cies.

“All these trou­bles in the world econ­omy are enough to make us feel like say­ing: ‘Win­ter is com­ing’,” Wi­dodo said, us­ing a phrase that char­ac­ters in the fan­tasy se­ries con­stantly re­peat to re­fer to spec­tral dan­gers that could de­stroy them all.

With ri­valry grow­ing in the world econ­omy, Wi­dodo said, “the sit­u­a­tion could be more crit­i­cal than the global fi­nan­cial cri­sis 10 years ago”.

The mar­ket ruc­tions have now cas­caded through to devel­oped mar­kets with Wall Street ex­tend­ing a slide into a sixth ses­sion on Thurs­day amid the trade war fears.

The US and China have slapped tit-for-tat tar­iffs on hun­dreds of bil­lions of dol­lars of each other’s goods over the past few months.

The tar­iffs stem from the Trump ad­min­is­tra­tion’s de­mands that

China make sweep­ing changes to its in­tel­lec­tual prop­erty prac­tices, rein in high-tech­nol­ogy in­dus­trial sub­si­dies, open its mar­kets to more for­eign com­pe­ti­tion and move to cut a po­lit­i­cally sen­si­tive US goods trade sur­plus.

Rub­bing salt in US wounds, China re­ported on Fri­day an un­ex­pected ac­cel­er­a­tion in ex­port growth in Septem­ber and a record $34.13 bil­lion (R500bn) trade sur­plus with the US.

In an in­ter­view, US Trea­sury sec­re­tary Steven Mnuchin said that he told China’s cen­tral bank chief that cur­rency is­sues needed to be part of any fur­ther Us-china trade talks and ex­pressed his con­cerns about the yuan’s re­cent weak­ness.

Mnuchin also said that China needed to iden­tify con­crete “ac­tion items” to re­bal­ance the two coun­tries’ trade re­la­tion­ship be­fore talks to re­solve their dis­putes could re­sume.

The US Trea­sury chief and Peo­ple’s Bank of China gov­er­nor Yi Gang ex­ten­sively dis­cussed cur­rency is­sues on the side­lines of the Bali meet­ings.

Mnuchin’s com­ments on

China’s cur­rency come ahead of next week’s sched­uled re­lease of a hotly an­tic­i­pated Trea­sury re­port on cur­rency ma­nip­u­la­tion, the first since a sig­nif­i­cant weak­en­ing of yuan be­gan ear­lier this year.

IMF fore­casts of global eco­nomic growth for 2018 and 2019 were cut to 3.7%, from 3.9%.

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