China’s ex-finance minister says more friction with US inevitable
ONGOING TRADE WAR WILL EASE, BUT CONFLICTS WILL PERSIST, LOU WARNS
ASino-US trade war could ease somewhat but wider conflicts between the world’s two largest economies will continue, Lou Jiwei, a former Chinese finance minister, said yesterday.
“Look at the next development, there could be compromises in the trade war at a certain stage, and we have seen signs of compromising,” Lou, now an official with a body that advises China’s parliament, told an economic forum in Beijing.
Officials from both countries on Thursday said China and the United States had agreed to roll back tariffs already put in place on each others’ goods if a “phase one” deal was concluded, but the idea has been met with opposition from some quarters of the administration US President Donald Trump.
Trump himself, in comments that hit stock prices and the dollar, said on Friday he had not agreed to a tariff rollback.
Washington has adopted a strategy to contain China’s economic rise by preventing the country from climbing up the global value chain, Lou said.
“Containment and countercontainment are inevitable and that will be a long-term issue,” he said. But Lou also said it would be difficult for the United States to decouple from China, given the potential disruption to global supply chains and the impact on businesses.
Capital controls
The US tariffs on Chinese exports will not fundamentally resolve its trade deficit, which is caused by the high US government debt ratio and a low household savings rate, he said.
China should open up its economy wider to foreign investors, but it should not rush to relax its capital controls, Lou said. More US tariffs against China are set to take effect on December 15, although officials from both China and the United States said this week they have agreed to roll back tariffs on
■
■ each others’ goods if a “phase one” trade deal is completed.
On Friday, though, President Donald Trump said he has not agreed to the rollbacks sought by China.
The more than year-long trade war has cost China $35 billion as the United States has cut down on Chinese imports, driving up prices for American consumers, according to a UN study published on Tuesday.