Published: Tue, April 24, 2018
Money | By Wilma Wheeler

Talks with USA on trade dispute welcome, says Beijing

Talks with USA on trade dispute welcome, says Beijing

Mnuchin held a string of meetings over the past three days with financial officials from China, Japan and Europe over the punitive tariffs the administration has unveiled in an effort to fulfill President Donald Trump's campaign promise to reduce America's huge trade deficits.

They [the USA and China] are not in a trade war yet, but there's a risk of a trade war ... it would be fair to describe U.S. policy as unpredictable and also quite aggressive.

The United States and China are on the brink of what would be the biggest trade dispute since World War II. The world economy, which grew by 3.8% past year, appears to have settled into a run of stronger growth.

On Friday, Mnuchin had called on the International Monetary Fund to do more to police countries running large trade surpluses, a role that has traditionally been left to the Geneva-based World Trade Organization.

"The IMF must step up to the plate on this issue, providing a more robust voice", Mnuchin said.

The discussions focused on issues related to the Chinese central bank, not trade, said the secretary.

"We have now adopted a framework for enhanced engagement on governance and corruption that aims for a more systematic, evenhanded, effective and candid engagement with member countries".

He appealed for the International Monetary Fund to go beyond its traditional role as an emergency lender for countries in financial distress and said it should more closely monitor the practices of countries that persistently run large trade surpluses. "We support a capital increase on the World Bank along with the associated reforms that they're talking about making", Mr Mnuchin said, adding that he was hopeful Congress would approve the increase. China countered by targeting $50bn in USA exports. "Ensuring that trade is free, fair, and reciprocal will boost global trade and support stronger, more sustainable growth".

The WTO projects global merchandise trade will expand by 4.4 percent this year, after increasing by 4.7 percent in 2017.

"We have to keep this group working together", said Nicolas Dujovne, the treasury minister of Argentina.

But German central bank chief Jens Weidmann said the G20 officials all agreed trade must benefit all countries.

"A strong quota-based permanent resource base for the IMF would serve to strengthen the Global Financial Safety Net (GFSN) and mitigate risks to the worldwide monetary system", Jaitley said, as per the speech released by the Finance Ministry.

IMF Managing Director Christine Lagarde said she's "delighted" the U.S. Treasury Secretary Steve Mnuchin would like her company to increase transparency on commerce loopholes and financial debt growth in states like China, an effort she said has been already underway.

Mnuchin said China has been "very helpful" in supporting US sanctions against North Korea, and welcomed the regime leader's announcement on Friday to suspend nuclear testing.

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