The 15-month trade frictions the United States instigated with China have been an appreciable drag on global economic and trade growth, and are a significant source of risk for the global economy, with “real spillover effects” for emerging markets.
These warning words from Tobias Adrian, director of the monetary and capital markets department of the International Monetary Fund, on Wednesday are right on the money, as the global economy and world trade are growing at 3 percent and 1.1 percent respectively, their slowest rates since the 2008 financial crisis.
Which is why the possibility of Washington and Beijing striking a deal, at least on some issues, has been met with huge sighs of relief around the world.
Intimations that agreements have been reached on specific issues that the two leaders can sign off on have been supported by the tangibles of China buying more agricultural products from the US, the US not imposing the tariffs on Chinese imports that were due to come into effect on Tuesday, and the announcement by the US side that the text is being prepared.
However, exactly what the text will be has remained behind closed doors, which has led to doubts that it is forthcoming because of differing paraphrases from the two sides. So far all that we have with any certainty is the oral consensus that some things have been agreed on and some things are still subject to discussion.
Which, of course, in itself is something. As that is certainly more than there was going into last week’s talks.
Yet until the details are down on paper accompanied by the signatures of the two leaders, it remains a compromise that will be widely perceived as precarious, considering what has happened before.
That is why the prospective meeting between the Chinese and US presidents at the APEC summit in Chile in November is being so eagerly counted down as it is anticipated that it is there that they will put their pens to paper.
The blotting of the ink can’t come fast enough for those who eye the intervening days with anxiety, feeling they hold the potential for the pending pact to go splat on the banana skin of actions unrelated to trade. Pressure-intended endeavors which do not conform to the congeniality required for a workable understanding.
Those with a more positive disposition offer the bonhomie on display at the news conference after the conclusion of last week’s talks as evidence that this time a breakthrough has been made and a practical understanding arrived at that will enable the two sides to discuss and eventually resolve other issues of contention.
It remains to be seen what actually happens, but certainly it is to be hoped that those who believe an understanding has been reached are proved right with something laid out in black and white.
Because if not, the trade war will only escalate, inflicting more harm on both economies and further dragging on global growth.
Washington and Beijing should make every effort to materialize what they have agreed so far as quickly as possible, as that will inject some much needed confidence that a turning point has been reached. China Daily