As the G20 summit closed in Buenos Aires yesterday, the world is eagerly watching whether the talks between the US and Chinese leaders in Argentina would help defuse the damaging trade war between the world’s two largest economies.
The first day of the summit offered a glimmer of hope for progress between Washington and Beijing despite President Donald Trump’s earlier threat of new tariffs on China, which would increase tensions already weighing on global financial markets.
Many market watchers say President Trump and Chinese President Xi Jinping will try to make progress toward a trade deal as businesses and investors fear a mounting series of tariffs could damage the global economy.
Trump has long railed against China’s trade surplus with the United States and Washington accuses Beijing of not playing fairly on trade. China calls the United States protectionist and has resisted what it views as attempts to intimidate it.
The US has already put tariffs on $250bn in Chinese goods, and could slap duties on an additional $267bn in imports, a Reuters’ dispatch showed. Beijing has responded with tariffs on $110bn in US goods, targeting politically important industries such as agriculture.
The list of goods covered by the trade war runs to thousands of specific items, from aircraft to zirconium.
While American consumers may notice an immediate impact with higher prices on TV sets and sneakers, tariffs on intermediate goods will also eventually be passed along.
The trade conflict between the world’s two largest economies has seen a 6% slump in the onshore yuan against the greenback this year, raising speculation that China has deliberately weakened its currency and drawing Trump’s ire. A weaker yuan lessens the impact of US tariffs on Chinese exporters.
Trump has repeatedly criticised China as a currency manipulator although his Treasury Secretary Steven Mnuchin refrained from officially designating the nation as a manipulator.
Trump, who campaigned in 2016 on cracking down on what he called Chinese trade abuses, comes into the meeting with a specific set of demands.
He wants to address alleged Chinese theft of intellectual property, forced technology transfers, ownership of American companies in China, and tariffs and non-tariff barriers, among other issues.
This year’s summit has proved to be a major test for the Group of 20 industrialised nations, whose leaders first met in 2008 to help rescue the global economy from the worst financial crisis in seven decades.
With a rise in nationalist sentiment in many countries, the G20, which accounts for two-thirds of the global population, faces doubts over its ability to deal with trade tensions and other geopolitical differences among.
G20 nations were still struggling to agree on the wording for the summit’s communique on major issues including trade, migration and climate change, which in past years have been worked out well in advance.
A stronger US and China would only make the world even stronger and more prosperous. Therefore, the meeting in Buenos Aires is a chance to mend this world-shaping relationship. Both leaders ought to seize it.
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