Finance leaders of the Group of 20 major economies will steer clear of promises to avoid protectionism in a communique on Sunday amid escalating US-China trade tensions, officials say, casting doubt on their ability to take a united front in averting a global recession.
US Treasury Secretary Steven Mnuchin said his scheduled meeting with People’s Bank of China Governor Yi Gang will not be a “negotiating meeting” on trade issues, reinforcing the view there will be little breakthrough in the row between the world’s two largest economies.
The trade conflict was spilling over to other areas of discussions, making the drafting of the G20 communique increasingly difficult, said an official familiar with the drafting of the communique.
“If we go down this route, we risk clogging the G20,” the official said.
The intensifying US-China trade conflict has jolted financial markets and stoked fears of a global recession, overshadowing a two-day gathering of G20 finance ministers and central bank governors in Fukuoka, southern Japan, concluding on Sunday.
Japan, which is chairing this year’s G20 meetings, has said the finance leaders won’t put trade high on the agenda and won’t seek to mediate bilateral trade rows. But the growing economic fallout from the trade war has made it hard for them to side-step the topic.
Bank of Japan Governor Haruhiko Kuroda said while global growth was expected to rebound at the latter half of this year, trade tensions were making the outlook uncertain.
On the insistence of US President Donald Trump, G20 financial heads in 2017 replaced a phrase about avoiding all forms of protectionism with a sentence that they would work “to strengthen the contribution of trade to our economies.”
Asked if the new phrasing would be kept this time, a second G20 official said: “Yes, most probably”.
The communique will keep a pledge to avoid competitive currency devaluations, though the language on exchange rates had not been finalized, the officials said.
The communique will be released on Sunday after being signed off by the G20 finance leaders.
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