The United States economy should begin a turnaround later this year as tax cuts and lower interest rates strengthen consumer confidence, according to trade consultant Harald Malmgren. Mr Malmgren, who served as a trade negotiator for former US presidents Richard Nixon and Gerald Ford, said the US downturn was having a domino-effect on the global scene. 'We do have weakness in the economy right now,' he said. 'Households are losing confidence and investors are being battered by the Nasdaq. 'This is going to pull down the exports of East Asia because we are the principal market and our rate of growth in imports is always immediately linked to the [US] domestic rate of growth.' Mr Malmgren said consumer spending in the US was likely to remain weak for 'a couple of quarters'. But he believed downward adjustments in interest rates as well as the new administration's proposed tax cuts would help the economy pick up later this year. 'I seriously doubt that we're going to go down into deep recession. We have plenty of room in the budget surplus for stimulation and plenty of room in the Federal Reserve to lower rates,' he said. 'We're likely to be swinging upwards later in the year.' Speaking at an Asia Society luncheon in Hong Kong yesterday, Mr Malmgren said China's accession into the World Trade Organisation could enhance the country's process of domestic reforms through external obligations and rules. But he pointed out it would be difficult for Beijing to enforce these obligations. 'It won't necessarily be in the hands of the [central] government to do anything because China is a big place and there are lots of local government interests in business,' he said. 'There will be interminable quarrels between various countries, especially the US and the European Union, over these obligations. 'We're going to be fighting about every commitment that China has made to enter the WTO: whether it's over agriculture, buying products from outside, or intellectual property protection.' Mr Malmgren believed these problems would be settled in a step-by-step manner and the mainland would benefit from WTO entry in the long term. He added the government headed by George W. Bush would take a more practical approach towards China compared with the Clinton administration. 'It's a more business-like approach . . . there will be less smoothness in relations when China does something we don't like,' he said. 'But in the end, the US and China have to become more congenially related. 'The future of the world is in the hands of these two countries.'