Scott Bessent points the finger at Beijing and asks G20 leaders to curb imports from China “to protect jobs in domestic industries.” The US Treasury Secretary expressed “the need to agree on ways to reduce global trade and fiscal imbalances,” speaking on the final day of the summit of the world’s twenty largest economies, in North Carolina. Meanwhile, another wave of sales in the bond market reignited concerns about rising debt levels and new inflationary pressures. “Bond yields indicate expectations of stable or declining inflation,” Bessent commented.
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The direct attack on China regarding trade, not new but always risky even for the United States, came as in Washington, Donald Trump and his administration prepare to receive, in three weeks, the visit of Xi Jinping. Bessent – according to Reuters previews – urged G20 governments to review trade terms with China and consider introducing higher trade barriers for Chinese products, in order to pressure Beijing to restore balance in its economy, shifting focus and incentives from production and exports towards domestic consumption. Faced with structurally weak domestic demand, China has doubled efforts to export electric vehicles, semiconductors, and other goods: its total exports increased by 23.9% in July year-on-year, also prompting the European Union to call for stricter restrictions on sales of Chinese products.
Until last night, the United States tried to reach a joint statement, if not against Beijing, at least “on the need to reduce global imbalances.” but the United States did not present a concrete plan to reduce their excessive budget deficits: a step that economists say is essential, not only for the White House’s credibility but also to reduce the annual global trade deficit, which exceeds 1,000 billion dollars.
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China, one of the G20 members, has shown little interest in the repeated requests over the years to reduce subsidies to industry and reshape its economy, while its currency, the yuan, remains significantly undervalued according to most indicators. During the G-20 meetings, Chinese representatives opposed any text or condemnation of the so-called “non-market economies.”
The European Commissioner for Economy, Valdis Dombrovskis, agreed with the American view of the United States, stating that “China is one of the main sources of global economic imbalances,” but also reiterated that it is up to “the United States and Europe to act” to achieve a more balanced global economy. “To briefly summarize this analysis, which we have been conducting for a couple of years, China should spend more, the United States less, and the European Union should invest more,” said Dombrovskis. “It is important that all economic blocs act to address imbalances, which obviously,” he added, “increases the effectiveness of the global policy response, and this particularly concerns China as well.”
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