U.S. Hints at China Truce as World Warns of Trade-War Threat
(Bloomberg) -- U.S. Treasury Secretary Steven Mnuchin said he’s considering a trip to China amid a trade dispute with Beijing that finance chiefs warn could derail the global economic upswing.
Mnuchin said he’s “cautiously optimistic” of reaching an agreement with China that bridges their differences over trade.
“A trip is under consideration,” Mnuchin told reporters on Saturday in Washington at the IMF’s spring meetings. “I’m not going to make a comment on timing, nor do I have anything confirmed.”
China’s Ministry of Commerce said Sunday it is aware that the U.S. is considering a visit to Beijing to negotiate economic and trade issues and welcomes such a move.
A visit by the U.S. Treasury secretary to China could signal a breakthrough in the spat between the world’s two-biggest economies, whose threats to slap tariffs on each other have rattled markets and raised fears of a trade war. It would come at a sensitive time for the region’s geopolitics, with negotiations under way on a planned meeting between President Donald Trump and North Korean leader Kim Jong-Un.
Mnuchin’s remarks came as finance ministers and central bankers at the IMF meetings gave their latest economic assessments, often citing trade as a threat looming over the strongest upswing in seven years.
Global growth has strengthened and is increasingly broad based, the IMF’s main advisory committee said Saturday. However, it noted that “rising financial vulnerabilities, increasing trade and geopolitical tensions, and historically high global debt threaten global growth prospects.”
Don’t expect too much from Mnuchin’s visit, said Gai Xinzhe, an analyst at Bank of China’s Institute of International Finance in Beijing. “It’s likely that they come and demand a price that’s too high for China. Then the two sides just end on a sour note, and the trade war continues. I’m not optimistic as it seems that Trump himself doesn’t know what he wants to get from China.”
IMF First Deputy Managing Director David Lipton summed up the main takeaway he heard from officials at the meetings this week as “times are good but it’s getting risky.”
Mnuchin said he met with Yi Gang, governor of the People’s Bank of China, at the IMF gathering this week. The discussions focused on issues related to the Chinese central bank, not trade, said the secretary. Mnuchin said they also discussed China’s planned further opening of some markets, a move that U.S. has encouraged and “appreciated.”
“China will vigorously push forward the reform and opening-up of the financial sector, significantly relax market access restrictions, create a more attractive investment environment, strengthen the protection of intellectual properties and actively expand imports,” Yi said in a statement on Saturday. China has announced plans to gradually remove foreign ownership caps for limits for car-, ship- and aircraft-makers.
Mnuchin said China has been “very helpful” in supporting U.S. sanctions against North Korea, and he welcomed Kim’s suspension of nuclear weapons testing that was announced the day earlier.
“We are going to continue the sanctions” and a “maximum pressure” campaign until North Korea abandons its nuclear-weapons program in a verifiable way, he said.
Mnuchin indicated he’s involved in a “dialogue” with the Chinese government to resolve the trade dispute. “We’re cautiously optimistic to see if we can try to reach an agreement,” he said.
Tensions have been escalating as Trump accuses China of unfair trade and presses for a reduction in the the U.S.’s $375 billion trade deficit with the Asian nation. The president is threatening to impose tariffs on as much as $150 billion on Chinese imports to punish the nation for alleged intellectual property theft. If the U.S. follows through, China has vowed to impose retaliatory tariffs on everything from American airplanes to soybeans.
Mnuchin also said he met with Russian Finance Minister Anton Siluanov during the IMF meeting, at Russia’s request. Moscow sought “clarification” on U.S. sanctions, Mnuchin said, without elaborating. “These are very important tools. We will continue to look at the use of sanctions in all different areas,” he said.
Siluanov on Friday said he views sanctions as “an instrument of protectionism” and condemned any measures taken against his country.
The U.S. has had discussions with Japan on a possible bilateral trade agreement, the secretary said. Trump had a “very successful” meeting this week in Florida with Japanese Prime Minister Shinzo Abe, Mnuchin said.
Japanese Finance Minister Taro Aso said he told Mnuchin that protectionism isn’t good. The U.S. and Japan clearly differ on their trade policies, Aso told reporters on Friday after meetings between the Group of 20 on the sidelines of the IMF summit.
France’s Emmanuel Macron lands in Washington Monday with a mission to take the edge off Trump’s “America First” foreign policy, for Europe at least.
The French president has had more success in striking up a rapport with Trump than most global leaders but his record of securing policy concessions is patchy all the same. While Macron pointed to this month’s missile strikes against Syria as a victory for French diplomacy, he failed to keep the U.S. in the Paris climate accord and his aides last week played down expectations that he might persuade Trump to change course on other issues.
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