The United States and China still have a long way to go to resolve their trade disputes although the partial deal signed this week is a step forward, IMF chief Kristalina Georgieva said Friday.

"Trade truce is not the same as trade peace," she said.

US President Donald Trump signed a deal with China this week that ends the escalation but leaves in place tariffs on two thirds of the goods imported from the Asian economic power.

In a speech to the Peterson Institute for International Economics, Georgieva called the accord an "important" step but cautioned that "much more work is ahead to heal the fractures between the world's two largest economies."

The IMF in its economic analysis has estimated the trade conflicts and tariffs have cut 0.8 percentage points off of global growth but she stressed that most of that is not due to the tariffs but to the uncertainty, which causes companies to put the brakes on investment.

"If I had to identify a theme at the outset of the new decade, it would be increasing uncertainty," she said.

With disputes still raging between the United States and Europe, she said "the global trading system is in need of a significant upgrade."

Georgieva said uncertainty affects not only businesses but individuals as well, especially given rising inequality within many countries.

In Britain, for example, "the top 10 percent now control nearly as much wealth as the bottom 50 percent," she said.

She warned that "excessive inequality hinders growth and... can fuel populism and political upheaval."

While government spending to help those at the bottom is key, "too often we overlook the financial sector, which can also have a profound and long-lasting positive or negative effect on inequality."

In a new study presented Friday, the IMF highlighted how access to the financial sector in China and India in the 1990s "paved the way for enormous economic gains in the 2000s."

"This in turn helped in lifting a billion people out of poverty," she said.

But she cautioned against the excesses that led to the 2008 global financial crisis, and noted that for many, the crisis has never ended, with one in four young people in Europe at risk of falling into poverty.

"There is no substitute for high-quality regulation and supervision," Georgieva said.

"We are safer but not safe enough."

Related Links
Global Trade News

Tweet

Thanks for being here; We need your help. The SpaceDaily news network continues to grow but revenues have never been harder to maintain. With the rise of Ad Blockers, and Facebook - our traditional revenue sources via quality network advertising continues to decline. And unlike so many other news sites, we don't have a paywall - with those annoying usernames and passwords. Our news coverage takes time and effort to publish 365 days a year. If you find our news sites informative and useful then please consider becoming a regular supporter or for now make a one off contribution.
SpaceDaily Contributor $5 Billed Once credit card or paypal		SpaceDaily Monthly Supporter $5 Billed Monthly paypal only

EU warns of WTO challenge if China-US deal creates 'distortions'
Beijing (AFP) Jan 17, 2020
The European Union will challenge the China-US trade agreement at the World Trade Organization if it creates "distortions" in the market that harm EU companies, the bloc's envoy to Beijing said Friday. Ambassador Nicolas Chapuis told reporters the 28-nation EU "will monitor the implementation" of the "phase one" deal that was signed on Wednesday by President Donald Trump and Chinese Vice Premier Liu He. "In our opinion, quantitative targets are not WTO-compatible if they lead to trade distortion ... read more