China hits back at US over trade, says unilateralism is “unprecedented challenge”

The US has begun to launch trade investigations under statutes seldom used in the World Trade Organization era, including a “Section 301” probe of China’s intellectual property practices. (Reuters)
Updated 21 September 2017
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China hits back at US over trade, says unilateralism is “unprecedented challenge”

BEIJING: China hit back on Thursday at recent criticism from the United States about its trade practices, saying some countries’ unilateralism is an unprecedented challenge to global trade.
Ministry of Commerce spokesman Gao Feng also said that foreign and domestic firms are treated equally in China and that foreign firms should not have concerns about investing in China.
The comments come amid stepped up pressure on Beijing from Washington over trade and pledges by China to further open its markets to foreign investors.
“Some countries’ unilateral actions and calls for unilateralism are an unprecedented challenge to the multilateral trading system,” Gao said.
The administration of US President Donald Trump has begun to launch trade investigations under statutes seldom used in the World Trade Organization (WTO) era, including a “Section 301” probe of China’s intellectual property practices.
On Monday, US trade envoy Robert Lighthizer said that China was a threat to the world trading system.
“The sheer scale of their coordinated efforts to develop their economy, to subsidize, to create national champions, to force technology transfer, and to distort markets in China and throughout the world is a threat to the world trading system that is unprecedented,” Lighthizer said, according to a transcript of the speech on the website of the Center for Strategic and International Studies. Gao defended China’s foreign investment policies, saying it has no laws requiring foreign companies to transfer technology to Chinese firms. “(Any technology transfer) is market-driven behavior between companies; there is absolutely no government intervention,” said Gao. The commerce ministry on Monday unveiled a four-month crackdown, running from September until the end of 2017, to protect the intellectual property rights of companies with foreign investors.


IMF warns of rising risks to global growth amid trade tensions

Updated 54 min 13 sec ago
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IMF warns of rising risks to global growth amid trade tensions

  • Worsening trade confrontations pose serious risks to the outlook, the IMF said
  • The fund warns growth could be cut by a half point by 2020 if tariff threats are carried out

WASHINGTON: The global economy is still expected to grow at a solid pace this year, but worsening trade confrontations pose serious risks to the outlook, the International Monetary Fund said Monday.
The IMF’s updated World Economic Outlook (WEO) forecast global growth of 3.9 percent this year and next, despite sharp downgrades to estimates for Germany, France and Japan.
The US economy is still seen growing by 2.9 percent this year, and the estimate for China remains 6.6 percent, with little impact expected near term from the tariffs on tens of billions of dollars in exports the countries have imposed on each other so far.
“But the risk that current trade tensions escalate further — with adverse effects on confidence, asset prices, and investment — is the greatest near-term threat to global growth,” IMF Chief Economist Maurice Obstfeld said.
The fund warns growth could be cut by a half point by 2020 if tariff threats are carried out.
Although the global recovery is in its second year, growth has “plateaued” and become less balanced, and “the risk of worse outcomes has increased,” Obstfeld said in a statement.
The report comes as US President Donald Trump has imposed steep tariffs duties on $34 billion in imports from China, with another $200 billion coming as soon as September, on top of duties on steel and aluminum from around the world including key allies.
China has matched US tariffs dollar for dollar and threatened to take other steps to retaliate, while US exports face retaliatory taxes from Canada, Mexico and the European Union.
“An escalation of trade tensions could undermine business and financial market sentiment, denting investment and trade,” the IMF report said.
In addition, “higher trade barriers would make tradable goods less affordable, disrupt global supply chains, and slow the spread of new technologies, thus lowering productivity.”
The IMF said growth prospects are below average in many countries and urged governments to take steps to ensure economic growth will continue.
The fund said global cooperation and a “rule-based trade system has a vital role to play in preserving the global expansion.”
However, without steps to “ensure the benefits are shared by all, disenchantment with existing economic arrangements could well fuel further support for growth-detracting inward-looking policies.”
The sweeping US tax cuts approved in December will help the economy “strengthen temporarily,” but growth is expected to moderate to 2.7 percent for 2019.
And while the fiscal stimulus will boost US demand, is also will increase inflationary pressures, the WEO warned.
China’s growth also is seen slowing in 2019 to 6.4 percent.
After upgrading growth projections for the euro area in the April WEO, the IMF revised them down by two-tenths in 2018 to 2.2 percent, due to “negative surprises to activity in early 2018,” and another tenth in 2019 to 1.9 percent.
The estimates for Germany, France and Italy were cut by 0.3 points each, with Germany seen expanding by 2.2 percent this year and 2.1 percent in 2019. France’s GDP is expected to grow 1.8 percent and 1.7 percent.
Meanwhile, Britain is now forecast to grow 1.4 percent this year, 0.2 points less than the April estimate, and 1.5 percent in 2019.
Japan’s GDP is seen slowing to 1.0 percent this year, two-tenths less than previously forecast, “following a contraction in the first quarter, owing to weak private consumption and investment.” It should grow 0.9 percent the following year.
India remains a key drivers of global growth, but the GDP outlook was cut one-tenth for this year and three-tenths for next year to 7.3 percent and 7.5 percent, respectively.
Brazil saw an even sharper 0.5-point downward revisions from the April forecast, to 1.8 percent this year.