(Yicai Global) April 11 -- A lack of communication between countries bumping heads over trade will not lead to positive results, and those involved should seek help from the World Trade Organization if appropriate, the head of the International Monetary Fund told Yicai Global.
The IMF helps countries prosper, develop and find stability through trade, and hopes any trade frictions can be solved through negotiations between the parties involved, Christine Lagarde said with regard to the issue of the China-US trade dispute. “If we can help in that respect, we will be happy to help,” she added. “But it’s a matter that really needs to be decided by the authorities of the countries.”
“I would in any event very strongly support dialogue between the parties,” Lagarde said in an interview after meeting with Chinese President Xi Jinping yesterday . “If you have different players operating on the basis of their respective plans and never talking to each other, it’s not a good outcome.”
“A good outcome is when parties have dialogue, there might be disagreement, there might be allegations that are actually based on reality, and that needs to be put on the table, debated and discussed in accordance with the system that exists,” she added.
“If it is within the WTO competence and jurisdiction, it should be within the WTO dispute resolution mechanism,” she said. “If it is outside the scope of the WTO, then it should be discussed between the parties, particularly when you are talking about the two largest economic powers in the world.”
Xi’s Boao Speech
The IMF’s managing director also spoke highly of President Xi’s keynote speech at the opening ceremony of the Boao Forum for Asia, dubbed the Asian Davos, which closes today. His “landmark speech” shows China has decided to play a “significant role” in the global multilateral system, Lagarde said.
Xi used the event to reveal how the world’s second-largest economy plans to further open up to the rest of the world. It will relax equity contribution limits on foreign businesses’ investments in Chinese financial institutions, accelerate its insurance sector’s opening, ease restrictions involved in setting up foreign-backed institutions, increase the range of permitted businesses for such organizations and broaden financial collaborations between Chinese and overseas companies.
China has a long-term vision, Lagarde said. The country wants sustainable growth and its growth model has changed significantly as part of a shift toward domestic consumption away from trade and investment, she said.
“China generally takes a long view and plays a long game as opposed to being focused in the short term,” Lagarde said. “In that context, to hear President Xi renewing his commitment to the multilateral system, renewing his commitment to respect the rule of law, to respect international trade, I think is very important.”
Xi indicated China would also cut auto import tariffs, import more into the country, better protect intellectual property, and ultimately create a friendlier environment for foreign businesses and investors because we all need “fresh air,” she said, repeating the president’s own phrase.
“That confirms a role that China wants to play in that multilateral system -- respecting the rule of law and abiding by the rules,” Lagarde added. “I see that much more as a momentum that has built over the last couple of years and which is being confirmed now in the context of the trade frictions.”