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Speaking at the Asian Financial Forum in Hong Kong on Monday, Lipton acknowledged that China’s leadership has been a “voice of reason” in terms of preserving the current system of rules-based international trade, but the nation also had more to do.
“We believe that effective and credible leadership in support of globalisation also requires a willingness to recognise and address one’s own shortcomings,” Lipton said. That means “protecting intellectual property rights and reducing the distortions of industrial policy, overcapacity, and policies that favor state enterprises.”
Lipton spoke just days after a US trade tribunal said in a preliminary ruling that imports of aluminum sheet from China are hurting American industry, setting the stage for the Trump administration to impose tariffs. Economists worry that heightened US-China trade tension remains one of the biggest threats facing global growth this year.
President Donald Trump will travel to the World Economic Forum in Davos next week where he is expected to continue his trenchant criticism of globalisation and multilateralism and to threaten new trade barriers to shrink America’s trade deficit with the world.
The aluminium case is one of several the US has launched to curb what President Donald Trump sees as China’s unfair trade practices. The White House is also weighing whether to slap tariffs on foreign shipments of the metal under the seldom-used section 232 of the Trade Expansion Act of 1962, which considers whether importation has implications for national security.
China should also accelerate its efforts to bring its financial sector to a more stable footing, according to Lipton. “China has a window of opportunity to accelerate economic reforms that can secure sustainable and inclusive growth,” he said. “China has made considerable progress in this area, as our recent assessment of its financial sector shows. But it is essential to sustain this effort to ensure that financial instability does not undermine the country’s extraordinary economic and social progress.”
China is on track to build up a debt-to-gross domestic product ratio of more than 320 per cent by 2022, a level that would rival Japan’s, Bloomberg economists estimate.
Lipton said during a separate interview Monday on Bloomberg Television that policy makers are now “pointed in the right direction” on debt.
“The Chinese have to bring credit growth down to grow less rapidly than the economy, or else credit will continue to be too big relative to the economy,” he said.