International Monetary Fund chief Christine Lagarde, who has been urging countries to avoid damaging protectionism, said this weekend’s spring meeting had “made progress towards dialogue.”
And shortly after her comments, US Treasury Secretary Steven Mnuchin announced he was considering a trip to Beijing to hold talks on the trade dispute, a welcome respite after weeks in which tensions had ratcheted ever higher.
Tensions between the world’s two largest economies have cast a shadow over this week’s gathering of finance ministers, given concerns a trade war would undercut the global recovery.
President Donald Trump last month approved steep tariffs on tens of billions of dollars of Chinese imports, while Beijing has slapped duties on key US agricultural exports and has threatened to do likewise for the sensitive American soybean industry.
The heated trade rhetoric comes at a delicate moment, as Washington and Beijing are both seeking to address North Korea’s nuclear program — which Pyongyang said Saturday it would largely scale back.
The IMF’s governing committee in a statement at the conclusion of the ministerial meeting highlighted the risks presented by “increasing trade and geopolitical tensions.”
Lagarde in recent weeks has repeatedly urged member countries to steer clear of protectionism and warned the uncertainty around trade disputes could choke off investment, a key drivers of the current recovery.
“My key concern…is to help in the process of resolving those issues before they escalate to a point where they would hamper growth and stability,” she told reporters at the conclusion of the meeting.
The IMF projects global growth of 3.9 percent this year and next but warns that the risks are tilted to the downside.
– ‘Cautiously optimistic’ –
Mnuchin differed markedly from his counterparts, saying the risk to global growth was from unfair trade practices, rather than the trade tensions.
But his announcement of a possible China trip could reduce the heat in the dispute.
While the timing of his visit to Beijing is unclear, and he did not provide details on the topics to be discussed, he said “a trip is under consideration.”
Among 18 bilateral meetings with his counterparts this week, Mnuchin said he had met with Yi Gang, governor the People’s Bank of China.
While the meeting with central bank chief Yi did not focus on trade, Mnuchin said he remained “cautiously optimistic” about the issue.
“The discussions were really around the governor’s actions at the PBOC and certain actions they’ve announced in terms of opening their markets which we very much encourage and appreciate,” Mnuchin said.
In his statement to the International Monetary Fund, Yi also warned that “an escalation of trade frictions caused by unilateral actions” posed a risk to the global economic outlook and called on countries to use “rules-based” multilateral organizations to resolve differences.
But he said China was committed to a series of reforms similar to those called for by the United States, including lower tariffs and protections for American technology.
“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.