Group of 20 finance leaders on Sunday said that trade and geopolitical tensions have “intensified”, raising risks to improving global growth, but they stopped short of calling for a resolution of a deepening U.S.-China trade conflict.
After fiery negotiations that nearly aborted the issuance of a communique, finance ministers and central bank governors meeting in southern Japan repeated tepid support for a rules-based multilateral trading system.
“Global growth appears to be stabilizing and is generally projected to pick up moderately later this year and into 2020,” the G20 finance leaders said in a communique issued as the meetings in Fukuoka closed.
“However, growth remains low and risks remain tilted to the downside. Most importantly, trade and geopolitical tensions have intensified. We will continue to address these risks and stand ready to take further action.”
It also said that G20 finance leaders had agreed to compile common rules by 2020 to close loopholes used by global tech giants such as Facebook and Google to reduce their corporate taxes.
The communique also contained pledges to increase debt transparency on the part of borrowers and creditors. Another priority is sustainable infrastructure development, an issue brought into sharper focus by concerns that China’s massive Belt and Road infrastructure drive was saddling poor countries with debt they can’t repay.
However, the final language excluded a proposed clause to “recognize the pressing need to resolve trade tensions”, which was dropped from a previous draft debated on Saturday.
The deletion, which G20 sources said came at the insistence of the United States, shows a desire by Washington to avoid encumbrances as it increases tariffs on Chinese goods. The statement also contains no admissions that the deepening U.S.-China trade conflict is hurting global growth.
International Monetary Fund (IMF) Managing Director Christine Lagarde emphasized that “the first priority should be to resolve the current trade tensions” while working to modernize international trading rules.
The IMF this week warned that, while growth is still expected to improve this year and next, the U.S.-China tariff war could cut 0.5 percent from global GDP output in 2020, about the size of G20 member South Africa’s economy.
U.S. Treasury Secretary Steven Mnuchin on Saturday said he did not see any impact on U.S. growth from the trade conflict and that the government would take steps to protect consumers from higher tariffs.
Mnuchin met People’s Bank of China (PBOC) Governor Yi Gang on Sunday in the first meeting of high-level U.S. officials in a month, but it produced no immediate result. Mnuchin described the meeting as “constructive” and “a candid discussion on trade issues”, but offered no further detail.