US-China trade war to cripple World growth

Source:Reuters-Global Times Published: 2018/10/11 19:43:40

IMF’s Lagarde warns against trade, currency wars, urges fix to global rules

International Monetary Fund (IMF) Managing Director Christine Lagarde warned countries against engaging in both trade and currency wars, saying these would hurt global growth and imperil "innocent bystanders" on Thursday.

Formally launching the IMF and World Bank annual meetings on the Indonesian resort island of Bali, Lagarde urged countries to "de-escalate" trade conflicts and fix global trading rules instead of abandoning them.

The US and China have slapped tit-for-tat tariffs on hundreds of billions of dollars of each other's goods over the past few months, rattling financial markets as investors worry that the escalating trade conflict could knock global trade and investment.

"We certainly hope we don't move in either direction of a trade war or a currency war. It will be detrimental on both accounts for all participants," Lagarde told a news conference. "And there would also be lots of innocent bystanders," including countries that are part of China's supply chain, Lagarde added

US Treasury Secretary Steven Mnuchin met with the People's Bank of China Governor Yi Gang on Thursday on the sidelines of the the IMF-World Bank meeting. "We discussed important economic issues," Mnuchin said of their meeting on Twitter.

Lagarde weighed into the debate on Thursday, saying that yuan weakness against the dollar was driven by the greenback's strength as the US Federal Reserve hikes interest rates. Against a basket of currencies, the yuan has depreciated less.

"We have supported the move of China toward (currency) flexibility and we want to encourage the authorities to continue on this path going forward," she said.

The yuan currency has faced strong selling pressure this year, losing over 8 percent between March and August at the height of market worries, though it has since pared losses as authorities stepped up support measures.

Lagarde said later that she believed Chinese authorities were taking steps to maintain growth, stability and investor confidence amid the rising trade conflict.

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