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Multilateral approach in line with Biden’s economic plan

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Janet Yellen testifies before the Senate Banking, Housing and Urban Affairs Committee on the "Semiannual Monetary Policy Report to the Congress", at Capitol Hill in Washington D.C., the United States, Feb. 14, 2017. U.S. (Xinhua/Bao Dandan)

In line with media predictions, US President-elect Joe Biden announced his new economic team with former Federal Reserve chairwoman Janet Yellen being officially nominated as secretary of Treasury. With the highly principled and pro-market Yellen leading Biden’s economic response to the COVID-19 pandemic, the US market expect an enhancement of confidence amid the pandemic crisis.

If confirmed by the US Senate, Yellen would be the first woman to serve as the department’s leader in its 231-year history, CNBC reported on Monday.

No stranger to the public, Yellen chaired the Federal Reserve from 2014 to 2018 maintaining a relative consistent policy tone. She also served as the 18th Chair of the White House Council of Economic Advisers under US President Bill Clinton from 1997 to 1999.

Yellen has been regarded as a candidate who would be accepted by both political parties in Washington DC, the nomination also revealed the Biden Administration’s priorities focusing on coronavirus control and containment, as well as trying to eke out an economic recovery, choosing a steady hand to form a more consistent policy environment for the capital market.

It is expected that Yellen and Biden’s new economic team will adopt a relatively stable and neutral path to boost economic momentum in the US based on economic principles, and help the American economy to rebuild confidence following the significant damage inflicted by months of Covid-19 related restrictions and economic activity shutdowns.

With over 13.5 million confirmed COVID-19 infection cases, the US has topped the list across the world for months. Having been hit hard by the virus, the world’s largest economy recorded drastic contraction of 31.4 percent in the second quarter. Per IMF’s latest estimation, it may shrink by 4.3 percent this year.

Suffering from insufficient epidemic prevention measures, the US economy is facing a dark winter of virus infection and economic woe, with a strong recovery far from certain. Even with stimulus policies rolling out, it takes months for the effects to show up. And although the US economy remains resilient, COVID-19 may continue to create headwinds until at least the middle of next year.

Facing the tough challenge, Biden stressed his priority in controlling the virus and economy recovery. In the meantime, restoring a multilateral cooperation globally would be in line with its economic recovery campaign, especially as the global trade ecosystem has been severely disrupted by the Trump Administration’s unilateralism and so-called “America First” nationalist agenda.

The US does not need to cultivate enemies all over the world, instead, maintaining stable and cooperative ties with overseas economies will benefit its own economic recovery and help the country to strengthen market confidence needed to shake off fallout from the pandemic.

Though Biden has not announced his new trade secretary or trade representative, and the specific trade policy of the new US administration remains to be seen, it’s clear that a cooperative approach is more consistent with Biden’s priorities against the backdrop of a deadly pandemic.

 

The article was compiled based on an interview with Huo Jianguo, vice chairman of the China Society for World Trade Organization Studies.

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