China Daily European Weekly : 2018-11-30

Cover Story : 6 : 6

Cover Story

6 COVER STORY EUROPEAN WEEKLY CHINA DAILY November 30-December 6, 2018 resolution of the tariffs issue. It is also important for third-party countries such as the United Kingdom, whose prime minister, Theresa May, will be taking a break from selling her Brexit deal to attend the summit in Buenos Aires. A report by the Centre for Economics and Business Research in London stated that tariffs placed by the US on Chinese goods had so far hit £1.9 billion ($2.4 billion; 2.1 billion euros) of UK exports. This is because British goods are caught up in the supply chains of both countries. Douglas McWilliams, founder and deputy chairman of the CEBR, says, “This is the direct effect, but there are a series of knock-on effects worldwide to this, and if it impacts on China’s growth or the US’, then there will be less demand for everyone else’s exports.” Notwithstanding the trade turbulence, just over 10 years after the collapse of Lehman Brothers, there are fears the world could be facing the prospect of another downturn, if only because the current recovery is looking increasingly prolonged. There are a number of concerns, including the effects of tightened monetary policy globally, particularly in the US, a slowdown in Chinese growth, the vulnerability of Italian banks and the risk this poses for the euro, and the possibility of the UK having a disorderly exit from the European Union. Roach, a former Asia chairman of Morgan Stanley and author of From page 1 It will be the first time the two have met face-to-face since the trade conflict between the US and China escalated. The US announced 10 percent tariffs on $200 billion worth of Chinese goods in September, and on Nov 27 Trump reiterated his threat to raise the rate to 25 percent in the new year, and hinted that other tariffs would be imposed. China is hoping that the G20 Summit will play a similar role to the one in London in 2009 — which produced a concerted response to the global financial crisis — and steer the world away from a path toward protectionism. Vice-Minister of Commerce Wang Shouwen said the unified approach demonstrated in London nearly a decade ago was needed now. “At a time when global trade is facing challenges from protectionism, we hope the G20 members can also take collective actions against unilateralism and protectionism,” he said at a news briefing on Nov 23. Xi’s attendance at the meeting will be part of his overseas trip that includes state visits to Spain, Panama, Portugal as well as Argentina. Shi Yinhong, professor of international relations at Renmin University of China in Beijing, said the best outcome from the summit would be some kind of truce in the trade conflict between the US and China. “Both sides could suspend the high tariffs, or the Americans may agree not to enforce the new escalation of raising tariffs from 10 to 25 percent on $200 billion worth of Chinese goods in the new year. “The very strict restrictions that the US is imposing on China’s hightech sector will not end in the immediate future. This is part of the bigger concern that Trump and Americans have of China becoming a more technologically advanced country than the US,” Shi said. Stephen Roach, senior fellow at Yale University’s Jackson Institute for Global Affairs, believes China holds the stronger cards in any negotiations with the US. “China ... has a lot of options. Unlike the United States, China never went to quantitative easing and zero interest rates, so there is plenty of scope for action on the monetary front. It also has fiscal space, which it used a little bit last month to provide some tax incentives for Chinese consumers. It also has currency leverage,” he says. “The economy is also shifting away from relying on external demand for its exports toward internal domestic consumption.” David Kelly, chief global strategist at JP Morgan Asset Management, also believes the US can ill afford a protracted trade war. He predicts that US growth will fall to less than 3 percent in the fourth quarter and that the effects of Washington’s tax-cutting stimulus will begin to fade in the new year. “The uncertainty caused by a protracted trade war could well slow investment spending further. An escalating trade war with China sits at the top of most lists of potential triggers for the next recession,” he says. President Xi Jinping's state visits to Spain, Argentina, Panama and Portugal id Left Beijing for Madrid on Nov 27 Met with Spanish King Felipe VI Had talks with Prime Minister Pedro Sanchez Met with president of the Senate and president of the Parliament and addressed the two houses Mt ith S i h Ki F li SPAIN Left Madrid for Buenos Aires on Nov 29 Unbalanced:TheCodependencyof AmericaandChina, said it is not the time for G20 members to be complacent. “We have had a long recovery from a very deep hole. The major economies were damaged horrifically by the crisis and what we have had is still an uneven recovery,” he says. “Yet if you look at the leading indicators, there is no sign of an imminent downturn.” Apart from the global economy, the main priorities for the summit are infrastructure for development, the future of employment, and food sustainability. The world is facing a projected infrastructure gap between now and 2035 of $5.5 trillion, according to estimates provided to the G20. China, with its Belt and Road Initiative launched in 2013, and also the Beijing-based Asian Infrastructure Investment Bank, which opened in 2016 and has 87 member countries, is one nation that has prioritized and led the way on infrastructure. Bukola Ogunsina, editor of the Sunday edition of the Nigerian newspaper Leadership, says the summit is right to prioritize infrastructure, as no continent suffers more from a lack of it than Africa. “China has assisted in infrastructure development throughout Africa through the Forum on China Africa Cooperation (which promotes African development and consists of China and nearly all African states) and the Belt and Road. They have built railways, roads and industrial parks,” she says. Ian Goldin, professor of globalization and development at Oxford University and a former economic adviser to late South African presi- Att d G Attends 13th Group of 20 (G20) Summit Attends informal meeting of leaders of BRICS countries Has talks with Argentine President Mauricio Macri Attends signing of joint action plan and cooperation documents f ARGENTINA Leaves Buenos Aires for Panama City on Dec 2 Has talks with Panamanian President Juan Carlos Varela Attends signing of cooperation documents PANAMA Leaves Panama City for Lisbon on Dec 3 H Has talks with Portuguese President Marcelo Rebelo de Sousa Meets with Prime Minister Antonio Costa Attends signing of cooperation documents t lk ith P t PORTUGAL Leaves Lisbon for Beijing on Dec 5 CHINA DAILY Theresa May, Shi Yinhong, Stephen Roach, prime minister of the UK, which is also hit by tariffs professor of international relations at Renmin University of China in Beijing senior fellow at Yale University’s Jackson Institute for Global Affairs Taking a break It is not only the two parties involved who will want to see some See page 7 PRINTED AND DISTRIBUTED BY PRESSREADER +1 604 278 4604 ORIGINAL COPY . 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