U.S., China Can't Let Trade Poison Whole Relationship, Singapore’s Premier Says

(Bloomberg) -- The U.S. and China shouldn’t let a lack of agreement on trade boil over into other aspects of cooperation, Singapore’s Prime Minister Lee Hsien Loong said.

Trade issues between the superpowers are "genuine ones," and leaders of the two countries need to make decisions to resolve any conflict, Lee told Bloomberg Editor-in-Chief John Micklethwait in an interview at the New Economy Forum in Singapore. Global trade issues need to be addressed or it could risk erupting into broader conflicts, he said.

"Both sides must want to reach a deal and then it can be worked out," Lee said, adding that the countries were reported to have been close to agreements which later faltered at the "top level."

U.S. President Donald Trump’s move to put tariffs on $250 billion of Chinese goods in a bid to rebalance global trade has led to retaliation from Beijing and exacerbated a raft of disputes, from human rights to U.S. military support for the democratically-run island of Taiwan. While Trump has floated the possibility of a deal when he meets China’s President Xi Jinping in the coming weeks, they remain far apart on market access and government support for state-run enterprises.

"The leaders of the two countries have to decide what they want to do, and if it cannot be worked out, then I think you really want to keep it from boiling over, respond in a restrained way and try to keep things going and prevent this from poisoning the overall relationship," Lee said. "Because even between America and China, there are so many things where you have to work together, otherwise you are not going to get anywhere, starting with North Korea."

Chinese Vice President Wang Qishan -- a long-time ally of Xi -- told the New Economy Forum on Tuesday that Beijing remained ready to discuss solutions to its trade war with the U.S. Wang also warned that China wouldn’t again be “bullied and oppressed by imperialist powers,” underscoring fears by business and political leaders on hand that rising nationalism in both countries would be harder to manage.

The New Economy Forum is being organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.

Trump has vacillated between optimistic and cautious assessments of a possible deal with China. He set up a call with Xi on Thursday, the first between the leaders in six months. On Monday, he said the trade conflict with China could still go either way.

"The trade deficit is on Mr. Trump’s mind but the economists will tell you that trade deficit is a manifestation of macroeconomic problems and not a matter of trade restraints or lack of trade openness," Lee said. "That has to be dealt with separately."

The American president has this year targeted allies and adversaries alike, threatening tariffs on all of China’s exports, proposing levies on European car-makers and saying he could leave the World Trade Organization, which he has described as “unfair.”

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