The U.S. and China are set to use the latest gathering of the world’s finance chiefs to marshal support for their respective cases in a trade dispute that shows no sign of ending soon.
Finance ministers and central bankers from the International Monetary Fund’s 189 member nations are gathering in Bali, Indonesia this week for the fund’s annual meeting. While the agenda will include discussions on the broader health of the global economy, it will also be an opportunity for American and Chinese officials to cobble together alliances.
On one side is President Donald Trump, who argues his tariffs are a necessary price to pay to force China to stop what he calls unfair trading practices and theft of intellectual property.
On the other is President Xi Jinping, who has positioned China as a champion of globalization and the existing trading order. In a series of speeches, Xi and his top officials have warned about the danger of tearing apart that system, while promising to gradually open up the Chinese economy.
“The struggle for trade alliances carved out of political allegiances is well and truly on," said George Magnus, an economist at Oxford University’s China Centre. “This is no ordinary trade spat, such as the one we saw with Japan in the 1980s. This is existential.”
Resisting U.S. Pressure
China will resist U.S. pressure just as it overcame "bullying" by other foreign powers in the past, Chinese Commerce Minister Zhong Shan told Bloomberg this week. That comparison with the invasions of China during what is often termed the "Century of Humiliation" suggests that the government isn’t likely to back down easily.
The U.S. last month slapped tariffs on a further $200 billion in Chinese goods, prompting Beijing to retaliate on $60 billion in American products.
Trump and Xi may talk at a meeting of the Group of 20 nations at the end of November, White House economic adviser Larry Kudlow said last week. “Better to talk than not talk, but the talks have to be serious,” said Kudlow, adding that Trump “believes that whole trading relationship is broken.”
U.S. Treasury Secretary Steven Mnuchin on Thursday met with People’s Bank of China Governor Yi Gang on the sidelines of the IMF meetings in Bali. “We discussed important economic issues,” Mnuchin wrote on Twitter, without elaborating.