Mnuchin expresses optimism trade standoffs can be resolved

China's economy grew a forecast-beating 6.8 percent in the first quarter, official data showed on April 17, overcoming Beijing's battle on financial risk and pollution and trade tensions with the US. (AFP)
Updated 22 April 2018
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Mnuchin expresses optimism trade standoffs can be resolved

  • “We are cautiously optimistic,” US treasury secretary says of trade talks with Chinese counterparts
  • China's commerce ministry welcomes prospect of US visit to discuss trade issues

The International Monetary Fund and the World Bank repeatedly warned at their meetings this week that intensifying trade tensions could jeopardize a healthy global economic expansion.
But US Treasury Secretary Steven Mnuchin expressed cautious optimism Saturday that countries could settle their differences without a trade war.
Mnuchin met during the past three days with financial officials from China, Japan and Europe over a series of punitive tariffs unveiled by the Trump administration against China and other trading partners.
In a session with reporters, Mnuchin refused to say how close the United States was to resolving the various trade disputes, but he did say progress had been made.
The United States and China are on the brink of what would be the biggest trade dispute since World War II. Each has proposed imposing tariffs of $50 billion on each other’s products; President Donald Trump is looking to impose tariffs up to $100 billion more on Chinese goods.
In a speech earlier this month, Chinese President Xi Jinping vowed to open China’s market wider to foreign companies, raising hopes the dispute with Washington could be resolved. Mnuchin said he discussed Xi’s proposals with Chinese officials. “We are cautiously optimistic,” Mnuchin told reporters, saying that he may soon travel to Beijing for further talks.

 

The Commerce Ministry in Beijing said Sunday that China welcomes a visit from the US to Beijing to discuss trade issues and confirms it has “received information” regarding Washington’s interest in such a trip.
Trade tensions dominated the three days of talks among top finance officials attending meetings of the Group of 20 major economies, the 189-nation International Monetary Fund and its sister lending agency, the World Bank.
The officials roundly criticized Trump’s get-tough approach to trade, a reversal of seven decades of US support for increasing freedom in global commerce. In his speech to the IMF’s policy committee Saturday, Yi Gang, the head of China’s central bank, said that global growth could be hurt by “an escalation of trade frictions caused by unilateral actions,” an obvious reference to America’s threatened tariffs against China.
Mnuchin insisted that the United States was not trying to provoke a global trade war but seeking to protect American jobs from unfair competition. “The president has been very clear on what our objectives are,” Mnuchin said. “We are looking for reciprocal treatment. This is not about protectionism.”
There were signs of conciliation. The US dropped its objection to the first increase in the World Bank’s capital resources since 2010, clearing the way for the bank’s board to OK a $13 billion increase in its capacity to make loans to poor countries. The move was tied to a package of reforms the US had sought.
Both the World Bank and IMF held meetings of their policy committees on Saturday. In a closing communique, the IMF expressed concern that the rising trade tensions could dim what at the moment are bright prospects for the global economy, which is expected to grow this year at the fastest pace since 2011.
“Trade tensions are not to the benefit of anyone,” said Lesetja Kganyago, who leads the policymaking committee and is governor of the South African Reserve Bank. “If there is a trade conflict, there could never be winners. We could all only be losers.”
On Friday, Mnuchin had called on the IMF to do more to police countries running large trade surpluses, a role that has traditionally been left to the Geneva-based World Trade Organization. The final IMF communique did state: “We will work together to reduce excessive global imbalances in a way that supports global growth.” The communique did not spell out how this would be accomplished.

FASTFACTS

$50 billion

The proposed level if tariffs by China and the US on each other's products.


India names Modi demonetization backer as cenbank head

Visitors are seen standing next to a logo of the Reserve Bank of India (RBI) at the bank's head office in Mumbai on December 5, 2018. (AFP)
Updated 12 December 2018
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India names Modi demonetization backer as cenbank head

  • Das — a high-profile backer of Modi’s controversial 2016 move to scrap high-value currency notes, known as demonetization

MUMBAI: Ex-finance ministry official Shaktikanta Das took charge of the Reserve Bank of India on Tuesday, in a swift appointment expected to ease a dispute with the government as it pushes for looser credit rules ahead of a general election.
The announcement by Prime Minister Narendra Modi’s administration came just a day after Urjit Patel resigned from the post, following months of clashes between the two institutions over lending curbs and how to deploy the central bank’s surplus reserves.
Pressure on the RBI to take immediate steps to boost the economy, including a transfer of the excess reserves to the government, could well rise after Modi’s ruling Bharatiya Janata Party (BJP) suffered likely election losses in three key states on Tuesday.
Das — a high-profile backer of Modi’s controversial 2016 move to scrap high-value currency notes, known as demonetization — will serve a three-year term as governor, effective immediately.
RBI watchers said they expected the 61-year-old, who retired last year as secretary of the department of economic affairs having previously served on the RBI’s board, to put relations between the Mumbai-based bank and the finance ministry in New Delhi on a stabler footing.
Investors will also look closely at his ability to hold up against outside influences after recent efforts by the Modi government to gain greater control over the central bank’s regulatory powers.
“The incoming governor will have to work hard to prove that he has his own independent mind,” said Deepak Jasani, head of retail research at Hdfc Securities.
Investors said any openly political appointee with little macro-economic experience, would not sit well with financial markets that already sold off following the BJP’s election setbacks.
But Ashish Vaidya, executive director and head of trading at DBS Bank in Mumbai, said he expected India’s debt and currency markets to react positively.
“He is a bureaucrat...We expect the RBI to take a pragmatic approach under him, be pro-growth and change its stance going ahead given that inflation has come off sharply,” he said.
Finance Minister Arun Jaitley told Reuters partner ANI that the government acknowledged the bank’s independence.
“Government will fully support the RBI and coordinate with it in areas where consultations of government are required to make sure India’s economy benefits from both government policy decisions and areas which fall within domain of the RBI,” ANI tweeted, quoting Jaitley.

SWIFT APPOINTMENT
Pronab Sen, India’s former chief statistician, said he was surprised by the speed of Das’s appointment.
“If you have a situation where a position as important as the governor of the RBI is filled within 24 hours of the resignation of the incumbent, that will raise eyebrows,” Sen told Reuters.
“People are going to say, clearly this guy had already been identified. And, the situation was created where Urjit Patel had to quit.”
Das — widely seen as a contender for the top RBI job after Raghuram Rajan’s term ended in 2016 — did not answer calls from Reuters to his mobile phone.
RBI officials who have worked with him closely said Das was likely to be more inclusive in the decision-making process than Patel.
“He has a balanced approach and is good at consensus building,” said a former deputy governor. .”..We have had our fair share of differences. But he has always been solution-centric rather than festering on those differences.”
Das worked in the finance ministry under both Modi’s government and the previous coalition led by the main opposition Congress party and was also involved in drafting the Insolvency and Bankruptcy code aimed at protecting small investors.
He came under fire for his pro-demonetization stance and was the most vocal bureaucrat at the time Modi withdrew the high-value bank notes to fight tax evasion.
Das last year criticized the methodology of global rating agencies and sought a sovereign rating upgrade for India.