Trump-Xi meeting at G20 may not go ahead, warns US Treasury Secretary Steven Mnuchin

IMF meeting in Bali told that White House is still to decide on whether meeting between US and Chinese leaders in Argentina will go ahead

PUBLISHED : Saturday, 13 October, 2018, 2:11pm
UPDATED : Friday, 26 October, 2018, 3:54pm

No final decision has been made whether US President Donald Trump and Chinese President Xi Jinping will meet at the gathering of G20 leaders in Buenos Aires, Argentina at the end of November, US Treasury Secretary Steven Mnuchin said on Saturday.

Mnuchin, speaking to reporters on the sidelines of the International Monetary Fund and World Bank annual meetings in Bali, also said that Chinese officials had told him that they did not want to see a further depreciation of the yuan’s exchange rate, an issue that the US has been very concerned about.

“I don’t think any decision has been made with regard to a meeting,” Mnuchin said when asked if the Chinese side had offered enough trade concessions to justify a meeting.

“To the extent we can make progress toward a meeting, I encourage that. There are no preconditions, the president will decide [whether to meet Xi].”

A news report on Friday that Trump and Xi would meet at the G20 caused a sharp rebound in US and global stock markets on the hopes that a resolution of the escalating trade dispute might be possible.

“Our objective is to increase exports and have a more balanced, fair relationship where our companies can do business there on terms similar to how they do business [in the US],” he said, noting that the rise of China’s middle class created a “tremendous opportunity” for American businesses in China.

Mnuchin emphasised that the US trade strategy was not to create a coalition of nations to “pressure” China, but rather to bring together nations who have “very, very similar issues [to those of the United States] as it relates to China”.

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Chinese representatives said they did not want a further depreciation of the yuan exchange rate, Mnuchin said. “They emphasised to me that it is not in their interest to see the [yuan] continue to depreciate.”

Mnuchin met People’s Bank of China Governor Yi Gang on Friday, but did not attribute the currency comments directly to him.

The yuan has fallen in recent days on trade concerns, raising questions about whether the People’s Bank of China (PBOC) would allow it to fall below the psychologically important level of seven to the dollar, a level the PBOC has defended previously.

Mnuchin warned in an interview on Monday that China should not use currency depreciation to gain a competitive advantage in trade. On Saturday he stressed that the US would continue to keep a close watch on the Chinese currency.

“Obviously, the currency issue is an important issue for us in trade and will be part of our trade discussions” with China, Mnuchin said.

“We want to make sure the depreciation is not being used for competitive purposes in trade.”

The Treasury Department is due to release its semi-annual Exchange Rate Report this week amid reports that it will not name China as a currency manipulator, despite increasingly contentious exchanges between officials of the world’s two largest economies.

He said the US intended to include the language used in the recently concluded deal with Canada and Mexico, which prohibits the competitive devaluation of exchange rates, in future trade agreements.

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“Our objective would be that the [language on] currency issues we would like to include in future trade agreements,” he said. “That is a good model for transparency, and not just for us.”

Mnuchin repeated that he is “not losing any sleep over” worries that China might sell its vast holdings of US Treasury securities in retaliation for any further US tariffs on Chinese imports.

Such a move would be very costly for the Chinese and the issue has never come up in discussion between US and Chinese officials, he said.

He also sidestepped criticism of the Federal Reserve’s monetary policy.

While he refused to make specific comments about it, he argued that there was “no mixed message” between his reticence and the sharp criticism Donald Trump levelled at the US central bank last week. Trump is concerned that the Fed will raise interest rates too fast and hurt growth, a legitimate issue, he explained.