When Donald Trump meets Xi Jinping at the G20 summit, nothing less than a healthy global trading system and continued economic growth will be on the table.
Nov. 29 (UPI) — When U. S. President Donald Trump meets his Chinese counterpart, Xi Jinping, on the margins of the G20 summit in Buenos Aires between Friday and Saturday, nothing less than a reasonably healthy global trading system and continued economic growth will be on the table.
It is one of the more significant meetings between two global leaders in the modern era.
The encounter will recall the high-wire diplomacy between Ronald Reagan and Mikhail Gorbachev in the 1980s, which signaled the end of the Cold War and, as it happened, the disintegration of the former Soviet Union.
Or, before that, Richard Nixon ’s visit to China in 1972, which resulted in the signing of the Shanghai Communique and an end to decades of hostility between the United States and China.
World markets unnerved by an evolving trade conflict between the world’s two largest economies will take their cues from this encounter between an unpredictable U. S. president and a Chinese leader who will not want to be seen to yield ground. Or, to give it an oriental description, lose face.
This is a fractious moment in world economic history.
Billions of dollars in global equity markets will rest on a reasonable consensus in the Argentine capital. The two sides will reach for a compromise that will enable relative stability to be restored to an economic relationship that is threatening to unravel.
Since a ragged outcome, or even failure, is in no one’s interests, it is hard to believe Washington and Beijing will not seek to calm legitimate concerns about the risks of a full-blown trade war and its impact on global growth.
U. S.-China trade tremors are having an impact on growth projections for 2018-20.
In its latest World Economic Outlook, the International Monetary Fund reports the world economy is plateauing, partly due to trade tensions and stresses in emerging markets.
The IMF has scaled back its global growth projections from its July Outlook forecast for 2019 to 3.7 percent from 3.9 percent. It has marked down U. S. growth by 0.2 percentage point to 2.5 percent, and China by a similar margin to 6.2 percent.
However, if trade disruptions persist, fallout will become more serious in 2020 with global growth projected to be down by 0.8 percent, and with it U. S. and China growth down significantly.
Trade wars have consequences, including risks of a global recession.
