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G20 policymakers to warn of trade war risks, divided on how 'pressing'

'Global growth appears to be stabilising and is generally projected to pick up moderately later this year and into 2020,' said the draft G20 communique

Reuters  |  FUKUOKA, Japan 

US-China trade war
US-China trade war

Global trade tensions threaten an expected pick-up in economic growth this year and in 2020, a draft communique by the world's financial leaders showed on Saturday, but the policymakers were divided on whether the need to resolve them was "pressing".

and central of the world's 20 biggest economies, the G20, are meeting in the southern Japanese city of to discuss the global economy amid rising trade tensions between and the

"Global growth appears to be stabilising and is generally projected to pick up moderately later this year and into 2020," the draft communique, seen by Reuters, said.

"However ... risks remain tilted to the downside. These include, in particular, intensified trade and geo-political tensions," said the draft communique, which may yet change before it is released on Sunday.

The draft statement, to which all the financial leaders have to agree, contains a sentence in square brackets -- which means it was not yet agreed -- that trade and investment were important engines of growth.

"We reaffirm our leaders' conclusions on trade from the Buenos Aires Summit and recognise the pressing need to resolve trade tensions," the sentence still under discussion said.

If the sentence is dropped from the final statement, it would mean rowing back on an agreement reached by leaders last year in that while the existing trade system -- the World Trade Orgnisation -- needs improvement, it helps world growth and should be fixed.

G20 leaders also agreed last December to review the WTO reform in later this month. But progress in overhauling the WTO, which still functions under rules created a quarter of a century ago, has been slow, partly because of US actions to block appellate appointments.

A Japanese who attended Saturday's G20 session told reporters that most of the group's members voiced concern that escalating trade tensions posed a huge downside risk for the global economy.

"With so many countries expressing concern over the fallout (from the trade tensions), there seems to be some momentum to reflect that in the communique. But there's no conclusion yet" on the language of trade, the official told reporters.

Kuroda hails deal

Relations between the and have deteriorated since US in early May accused of reneging on commitments to change its ways of doing business with the rest of the world. raised tariffs on Chinese goods and threatened new levies, while has retaliated.

US Treasury Steven Mnuchin, who will hold talks with China's on the sidelines of the G20 gathering, said the wants free, fair and balanced trade with China, in part to close a gaping US trade deficit with

But the United States is prepared to levy tariffs on virtually all remaining Chinese imports if the "right deal" cannot be reached to satisfy US demands for better Chinese protections of intellectual property and curbs to and state subsidies, Mnuchin said.

"If we can't have that, the end result will be that my expectation is that many companies will move their production out of China to other locations," due to tariffs, Mnuchin said.

He said his scheduled meeting with People's Bank of China will not be a "negotiating meeting" on trade issues, reinforcing the view there will be little breakthrough in the row between the world's two largest economies.

He added that any major progress will rest with Trump's expected meeting with Chinese at a G20 leaders' summit late this month.

In a rare positive development, the US administration said it will put off imposing tariffs against after the two countries reached a deal to contain the migration of immigrants crossing the southern US border.

"It's a very good outcome not just for the United States and Mexico, but for the global economy," told reporters.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Sat, June 08 2019. 18:06 IST
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