On Friday central bankers and finance ministers gathered in Washington for the spring meeting of the International Monetary Fund (IMF), where Bruno Le Maire, the French Economy Minister, did not pull any punches, calling the US’s trade spat with China ‘vain and pointless’. Le Maire went on to say ‘We run the risk of trade war. We run the risk of multilateral order breaking down that is good for no one, and most definitely not for the world economy and growth’. That is not to say Le Maire believed that China is 100% the innocent party in the trade dispute, believing that China must play by, and respect the rules of international trade. However, with China being an increasingly key part of global trade he thinks the IMF should ‘redefine international trade with China, not against China’.
Of course, that is not how the US administration sees it, with what they see as US technology and intellectual property theft by China as the flash point for the current tariffs. As Steven Mnuchin, U.S. Treasury Secretary believes ‘We strongly believe that unfair global trade practices impede stronger US and global growth, acting as a persistent drag on the global economy’ arguing that the IMF should be a strong voice pushing ‘to dismantle trade and non-tariff barriers and to protect intellectual property rights’.
However, in a sign that a breakthrough may be on the cards, yesterday both the US and China sent positive signals on negotiation of the trade dispute. Mnuchin indicated he may travel to China and is ‘cautiously optimistic’ on the chance of reaching an agreement with Beijing, although there was no clue on timing. The Chinese Commerce Ministry replied saying they welcomed the possible negotiation with a statement on the website adding, ‘The Chinese side has received information that the US side hopes to come to Beijing to discuss economic and trade issues. China welcomes this’.
Also over the weekend North Korea announced it was ending all nuclear testing having ‘completed its goal of developing nuclear weapons’. Kim Jong Un, the North Korean leader was quoted on Saturday, saying ‘under the proven condition of complete nuclear weapons, we no longer need any nuclear tests, mid-range and intercontinental ballistic rocket tests, and that the nuclear test site in northern area has also completed its mission’.
The news of the ending of the tests comes a week before a meeting of Moon Jae-in, the South Korean President and Kim Jong Un in what is being seen as a precursor to the planned meeting between Donald Trump and Kim Jong Un which is due to take place in late May or early June. Trump seems keen on the idea, tweeting ‘This is very good news for North Korea and the world - big progress. Look forward to our Summit’.