Saturday , June 22 2024

US should keep open trade with China to resolve disputes: IMF


WASHINGTON/ BEIJING: The US would be better served by maintaining its open trade system rather than imposing new punitive duties on Chinese goods, the International Monetary Fund said on Thursday, adding that Washington and Beijing should work together to resolve their trade tensions.

IMF spokesperson Julie Kozack told a regular news briefing that such trade restrictions as those announced by President Joe Biden on Tuesday can distort trade and investment, fragment supply chains and trigger retaliatory actions.

“Fragmentation of this type can be very costly for the global economy,” she said.

Kozack said the IMF identified some 3,000 global trade restrictions in 2023, up from 1,000 in 2019, and under a worst-case scenario of severe fragmentation into geopolitical blocs, this could reduce global economic output by some 7%, equivalent to removing the GDP of Japan and Germany combined.

“With respect to the tariffs, our view is that the US would be better served by maintaining open trade policies that have been vital to its economic performance,” Kozack said. “We also encourage the US and China to work together toward a solution that addresses the underlying concerns that have exacerbated trade tensions between the two countries.”

Washington has sought to justify the sharply higher duties on Chinese electric vehicles, solar products, semiconductors, medical supplies and other goods as a pre-emptive measure to protect domestic industries against Chinese economic policies that have encouraged over-investment and over-production in these sectors that are expected to unleash a flood of exports into global markets.

Beijing has vowed to retaliate against the new duties and has accused some U.S. officials of “losing their minds.”

Kozack said IMF First Deputy Managing Director Gita Gopinath will travel to Beijing from May 26 to 29 to meet with government officials on the Fund’s annual “Article IV” review of China’s economic policies. Gopinath will hold a news conference on the IMF’s China recommendations on May 29.

Earlier, a US move to raise tariffs on Chinese goods is a sign of weakness, not of strength, and shows that some in the United States may be “losing their minds”, China’s foreign minister said on Wednesday, in unusually blunt comments.

US President Joe Biden on Tuesday unveiled steep tariff increases on Chinese imports including electric vehicle (EV) batteries, computer chips and medical products, risking an election-year standoff with Beijing as he woos American voters who give his economic policies low marks.

China immediately vowed retaliation.

“This is the most typical form of bullying in the world today! It shows that some people in the United States have reached the point of losing their minds in order to maintain their unipolar hegemony,” Foreign Minister Wang Yi said, according to a statement published by state broadcaster CCTV.

“The US’s suppression of China does not prove that the US is strong, but rather exposes that the US has lost its self-confidence and is out of order,” he said.

The US move, instead of hindering China’s development, will inspire its 1.4 billion citizens to work harder, Wang said.

“At this critical moment of global economic recovery, the international community should warn the United States not to cause new trouble for the world,” he said.

Biden said China would probably raise tariffs in retaliation, possibly on unrelated products but said the move was unlikely to lead to international conflict. (Int’l Monitoring Desk)

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