Trade war contributors US, China may strike truce at G20 summit

Buenos Aires: As US President Donald Trump makes his flying entry into Argentina today for a G20 summit, speculations are rife that US and China will go head on with their trade war.

The weekend summit is confronted with increasingly dire warnings by the International Monetary Fund (IMF), among others, of the potential harm faced by the world economy from the tussle between top economies of the world.

In a pre-G20 report, the IMF had said the auto tariffs, that are supposedly to be imposed by the US on Europe and Japan, could cut three-fourths of a per cent off the global economy.

G20 leaders, whose countries account for four-fifths of the world’s economic output, first met in November 2008 to forge a united front against the global financial crisis.

Global markets are already rattled as both the US and China have enacted tariffs. The trade of blows is expected to continue till January. Trump is expected to press Chinese President Xi Jinping to avert the stepped-up tariffs by throwing open China’s markets to US competition and protecting foreign companies’ intellectual property.

On Wednesday, US Trade Representative Robert Lighthizer slammed Beijing for failing to offer ‘meaningful reform’ on aggressive trade policies, and threatened tariffs on Chinese autos.

China’s head however has vowed that China would boost protection of intellectual property. But foreign firms in China complain that such promises are all too routine and ring hollow. At best, analysts say, there will be a temporary truce at the G20 to give both Trump and Xi something to crow about.

Meanwhile the US, Canada and Mexico are expected to sign a revamped version of the North American trade pact NAFTA on Friday.

May and mayday

On the other hand, Britain’s ‘Brexit’ separation from the European Union is seen as another threat to global growth, IMF chief, Christine Lagarde, said. May will be the first British leader to visit the Argentine capital after Britain and Argentina went to war over the Falkland/Malvinas islands in 1982.

May is expected to use the G20 to sell Britain’s post-Brexit trading future outside the EU. It must be noted that May still has to win backing for the deal from the fractious British parliament.

It is yet to be seen how India will be expected by the trade war as India too has been putting off raising taxes against the North American nation. Currently, the trade balance hangs in favour of India.

Record investment
While the trade war is ongoing, on a positive note for India, IFC the World Bank arm has said it has invested a record $2.6 billion in India in 2017-18. The number is more than 100 per cent over the previous two years.

“IFC invested a record $2.6 billion in India in FY2018 – a rise of 136 per cent over the figure two years ago – in the key priority areas of infrastructure, logistics, inclusion, and sustainability,” IFC said.

These investments are all long-term, made over 40 engagements with partners ranging from new-age start-ups, such as Coverfox and Bizongo, to established names such as Mahindra & Mahindra and HDFC, it said.

“This is an all-time high and addresses key development gaps through select and systemic interventions in affordable housing, small and medium enterprises, distressed assets, technology start-ups, logistics, agriculture, renewable energy, and sustainable mobility.”

NT Bureau