US urged to engage China, not shout at it
Ex-Treasury secretary Lew warns that trade conflict risks spiralling out of control if current trajectory is maintained
The US should engage China on trade instead of having a “shouting match,” former US Treasury Secretary Jacob J. Lew said.
“Conflict isn’t going to resolve a lot of those issues,” Lew said yesterday in Beijing. There’s a risk that the rhetoric could spiral out of control into more serious conflict, and the US should work toward better outcomes instead of being an outlier on global trade, he said.
“From a US perspective, there’s a lot of opportunity to invest in China, there’s a lot of opportunity for US-China economic relations to lead to mutual benefit, but only if China plays by the rules, and only if the US does the same,” said Lew.
Lew’s successor, Treasury Secretary Steven Mnuchin, addressed Chinese officials during the Group of 20 meetings in Buenos Aires this week by reiterating that trade must be free, fair and reciprocal, said source. Mnuchin argued for China to adopt a market-oriented trade regime so economic forces could work more efficiently, the person said.
On Tuesday, China made further promises to protect the intellectual property of foreigners investing in its economy, addressing a long-standing grievance as US President Donald Trump plans new tariffs aimed at Beijing.
The White House plans to impose tariffs worth as much as $60 billion (Dh220.38 billion) on Chinese products as soon as this week.
“What the world does not need is a trade war,” Lew said. “These tariffs are risky. You asked me what this means for the US and China, it’s much bigger than that. Once you start putting tariffs in place that other countries don’t think are fair, the risk of response and retaliation is very real.”
Lew said risks of uncertain policy and questions about US leadership don’t help the economic outlook and that it’s uncertain whether the country can preserve its legacy of being a foundation of global stability and security.
Consequences
“This is a question about the US’ place in the world,” Lew said. “We’ve had for the last 70 years an alliance system with Europe and Asia where our allies around the world could rely on us being the protectors of the rule of law. I worry that policies that weaken our leadership in the world have much bigger consequences.”
Lew said he has worked very closely with both Yi Gang, who was appointed this week as China’s first new central bank chief in 15 years, and President Xi Jinping’s chief economic adviser Liu He, who was elevated to vice-premier.
“Both are committed to reform,” Lew said. “They’re both very knowledgeable about the economy and they understand what China needs to do to have a strong economy, and they understand the global economy. The challenge is, as policymakers, will the technocratic view or the political view prevail?”
What the world does not need is a trade war. These tariffs are risky... Once you start putting tariffs in place that other countries don’t think are fair, the risk of response and retaliation is very real.” Jacob J. Lew | Former US Treasury Secretary