World economy's guardians signal readiness to cushion trade risk

Jeannie Matthews
June 11, 2019

The G20 source said that the communique to be issued later on Sunday will say: "Most importantly, trade and geopolitical tensions have intensified".

During Trump's interview with CNBC, he also had scathing criticism of the U.S. Federal Reserve and complained that Xi effectively had control of China's central bank, while bemoaning the fact that he did not.

Group of 20 finance leaders said on Sunday that trade and geopolitical tensions have "intensified", raising risks to improving global growth, but they stopped short of calling for a resolution of a deepening United States-China trade conflict.

But the final language deleted a clause to "recognise the pressing need to resolve trade tensions" from a previous draft being debated on Saturday.

U.S. Treasury Secretary Steven Mnuchin says he held a constructive meeting with the head of China's central bank and that their discussion on trade issues was "candid".

U.S. Treasury Secretary Steven Mnuchin has said that Trump and Chinese President Xi Jinping would meet at a June 28-29 G20 summit in Osaka, but the meeting has not been confirmed by China.

The latest round of China-US talks, last month, ended without a breakthrough.

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"A worsening of the worldwide climate and a real trade war would lead to an even more marked slowdown in global growth, with a direct impact on our jobs, companies, factories and sectors", Le Maire told AFP in an interview on the sidelines of the meeting.

Nevertheless, Mnuchin also pointed to the positive boost to the world economy that could result from a breakthrough in trade talks, likely to be the main focus of a meeting between the USA and Chinese leaders at a G20 summit later this month.

Trump's threatened tariff hike came as G20 finance ministers meeting in Fukuoka, Japan, said that trade and geopolitical conflicts are risking global economic growth, but at the USA insistence, dropped a call to "recognize the pressing need to resolve trade tensions".

He has claimed that the country agreed to purchase large amounts of USA agricultural products as part of the agreement, but Mexican officials say there is no such provision. In a G-20 group meeting later in the day, the two were seen exchanging friendly remarks, but there were no fresh signs Beijing is ready to compromise in the dispute over trade and technology. "That slowdown has gone on for the a year ago", Steven Mnuchin told reporters on Saturday. Trump had threatened to impose a 5 percent tariff on all Mexican goods beginning Monday, if Mexico didn't take concrete action to stem the flow of migrants entering the United States.

Finance ministers and central bank governors meeting in Japan this weekend will try to make headway on long-standing issues such as how much global giants like Facebook and Amazon should pay in taxes.

Taking a different line from the other policymakers, Mnuchin said the slowdown in some parts of the world was not due to trade difficulties and even said the friction could benefit some countries if companies relocated from China to avoid tariffs. "We recognize our business community's call for the G20 to continue supporting the multilateral trading system". The unemployment rate is the lowest since 1969 and so far inflation data shows that consumers haven't felt pressure from rising prices.

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