China Daily Global Edition (USA)
Lardy sees positive message leading to meeting
Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics, takes comfort in recent high-level China-US contacts running up to the first meeting between President Xi Jinping and President Donald Trump.
US Secretary Rex Tillerson visited Beijing on March 18-19 during which he described the bilateral relations as being based on no conflict, no confrontation, mutual respect and win-win cooperation.
Back in February, US Treasury Secretary Steven Mnuchin talked on the phone with Chinese Vice-Premier Wang Yang, pledging to work together on a range of issues.
These are in addition to Trump’s “lengthy” and “extremely cordial” phone call with Xi in early February.
Lardy described Tillerson’s language in Beijing as “pretty positive” and no hints of looking for a trade war or gaining any unilateral advantage over China.
He saw this as indication that Trump will be sending the same message when meeting Xi in his Mar-a-Lago estate in Florida on April 6-7.
Lardy also expressed his concern over certain risks. “He (Trump) can go off script very easily,” said Lardy, adding that the Trump administration has not unveiled much of its global economic policy.
One thing that could come out of the summit is that they agree to continue the Strategic and Economic Dialogue (S&ED), but probably in a different name that “sounds bigger and better,” according to Lardy.
An authority on the Chinese economy, Lardy disagreed with the notion that China should be blamed for the loss of US manufacturing jobs, citing studies that show 80 percent of job losses were due to technological change.
A study at Ball State University showed that 85 percent of job losses are attributed to technological change, largely automation rather than trade.
Lardy also dismissed the allegation that China is involved in currency manipulation. He cited the example that former US Treasury Secretary Tim Geithner was trying years ago to get China to agree to a goal of current account surplus under 4 percent. The Chinese side would not agree.
China’s current account surplus is now only 1.9 percent, half of what Geithner was proposing a few years ago.
“So I don’t think there is any basis for charging China of currency manipulation. And I think Secretary Mnuchin understands that,” Lardy said.
The US Treasury this month is expected to issue a report on exchange rate policies of US major trading partners.