US-China rift ‘threat’ to economy: IMF
China’s top trade negotiator to visit US despite tariffs
PARIS/BEIJING: The head of the International Monetary Fund said yesterday that fresh trade tensions between the United States and China were the main threat to the world economy.
“Clearly the tensions between the United States and China are the threat for the world economy,” Christine Lagarde told journalists at a conference in Paris, adding that recent “rumors and tweets” made an agreement between the countries less likely. President Donald Trump jolted global markets on Monday by threatening on Twitter that tariffs already imposed on $200 billion in Chinese exports to US would more than double to 25 percent on Friday from their current level of 10 percent.
Also speaking at the Paris Forum event, French Economy Minister Bruno Le Maire warned about the impact of a trade war between the world’s two biggest economies.
“We are looking very carefully at the current negotiations between China and the US. We want these negotiations to stick with principles of transparency and multilateralism,” he said, speaking in English.
He called on the two sides to “avoid decisions that would threaten and jeopardise world growth in the coming months.” “Raising tariffs is always a deadlock and a negative decision for everybody-for the US, for China, for the eurozone, for Europe and for growth all over the world,” he said.
Chinese delegation
Le Maire cautioned that during a period of slowdown in world growth there should not be “negative decisions that could accelerate that slowdown.”
China said yesterday its top trade negotiator will visit the United States for talks with his American counterparts this week. The countries have been locked in talks to resolve tensions that have seen both of them impose tariffs on goods worth $360 billion.
Treasury Secretary Steven Mnuchin has described the negotiations as 90 percent complete but told reporters that in recent days the talks went “substantially backward”, which he blamed on China reneging on previous commitments.
Meanwhile, China said yesterday its top trade negotiator will visit the United States for talks with American counterparts this week even as Washington stepped up pressure with plans to hike tariffs and complaints that Beijing was backtracking on its commitments. The commerce ministry confirmed in a brief statement that Vice Premier Liu He, President Xi Jinping’s trade pointman, would visit the US on Thursday and Friday.
The trip is taking place a day later than expected after President Donald Trump jolted global markets by announcing that tariffs on $200 billion in Chinese merchandise will more than double to 25 percent on Friday. “China always believes that mutual respect, equality and mutual benefit are the premise and the basis for reaching an agreement. Adding tariffs will not solve any problem,” Chinese foreign ministry spokesman Geng Shuang said at a regular press briefing. Confirmation of Liu’s travel plans lifted Asian stock markets as his presence could raise hopes that a deal is still possible. The tariffs announcement tanked stock markets worldwide on Monday and worried US farmers and businesses who have been banking on a resolution to the year-long conflict that has engulfed $360 billion in two-way trade.
US officials had said the world’s two largest economies were close to an agreement but Beijing reversed course in recent days. “Over the course of the last week or so, we’ve seen an erosion in commitments by China, I would say retreating from commitments that have already been made in our judgement,” US Trade Representative Robert Lighthizer was quoted as saying in media reports on Monday. He said the tariffs would increase at 12:01 am (0401 GMT) on Friday.
Treasury Secretary Steven Mnuchin described the negotiations as 90 percent complete but told reporters that in recent days the talks went “substantially backward”, according to the media reports.
Complaining that talks were moving too slowly because China was trying to “renegotiate” the terms, Trump vowed Sunday to ratchet up existing tariffs this week and extend the 25 percent punitive duties to the remaining $350 billion in Chinese goods imported into the country each year.
Comments from officials in recent weeks indicated the sides were making progress towards an agreement aimed at addressing longstanding concerns about the forced transfer or outright theft of American technology, as well as reducing the US trade deficit with China.
“It is normal for the two sides to have divergences. China does not evade problems and is sincere in continuing consultations,” Geng said. But William Reinsch, trade policy expert at the Center for Strategic and International Studies, said China will never meet all the US demands.
“At some point, the president is going to figure out that they’re not going to give him everything he wants,” he said. That will put Trump in “a precarious political position”, whether “to accept an agreement that will be criticized as weak, or not to have an agreement and be criticized for failing”.
“And I can imagine that he is unhappy about that.” Freya Beamish of Pantheon Macroeconomics warned that Trump’s aggressive tactics could backfire.
“It is much harder for China’s leaders to do that if it looks like they have signed with a gun to their heads.”
Restrained growth
US manufacturers and farmers were becoming more optimistic amid signs of progress and comments from officials that the talks were entering their final phase, reinforced by reports Beijing was sending 100 officials to this week’s negotiations. Trump credits the tariffs with the strong first quarter growth but economists and businesses have complained that the trade conflict is in fact hurting the bottom line and the uncertainty is causing them to delay investment.
Jake Colvin of the National Foreign Trade Council, a pro-trade US business group, said the tariffs “come at the expense of American businesses and farmers and consumers as well”. And escalating the tariffs to the remaining Chinese goods, which would be expected to spark further retaliation from Beijing, would cut 0.3 percentage points off US growth, according to Oxford Economics. —AFP