“Growth remains low and risks remain tilted to the downside,” a communiqué said.
Group of 20 finance leaders said on Sunday that trade and geopolitical tensions have ”intensified”, raising risks to improving global growth, but they stopped short of calling for a resolution of a deepening US-China trade conflict.
After rocky negotiations that nearly aborted the issuance of a communiqué, Finance Ministers and central bank governors meeting in southern Japan, affirmed language issued in Buenos Aires last December that offered tepid support for a rules-based multilateral trading system.
“Global growth appears to be stabilizing, and is generally projected to pick up moderately later this year and into 2020,” the G20 finance leaders said in a communiqué issued as the meetings in Fukuoka closed. “However, growth remains low and risks remain tilted to the downside. Most importantly, trade and geopolitical tensions have intensified. We will continue to address these risks, and stand ready to take further action,” the communiqué said.
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It also said that G20 finance leaders had agreed to compile common rules by 2020 to close loopholes used by global tech giants such as Facebook and Google to reduce their corporate taxes.
The communiqué also contained pledges to increase debt transparency on the part of both borrowers and creditors and to make infrastructure development more sustainable, an initiative launched in the wake of complaints that China’s massive Belt and Road infrastructure drive was saddling poor countries with debt they can’t repay. But the final communiqué language excluded a proposed clause to “recognise the pressing need to resolve trade tensions” from a previous draft that was debated on Saturday.
The deletion, which G20 sources said came at the insistence of the United States, shows a desire by Washington to avoid encumbrances as it increases tariffs on Chinese goods. The statement also contains no admissions that the deepening US-China trade conflict was hurting global growth.
International Monetary Fund Managing Director Christine Lagarde said she “emphasized that the first priority should be to resolve the current trade tensions” while working to modernise international trading rules.
The IMF warned earlier this week that while growth was still expected to improve this year and next, the US-China tariff war could lop 0.5 per cent from global GDP output in 2020, about the size of G20 member South Africa’s economy.
US Treasury Secretary Steven Mnuchin said on Saturday he did not see any impact on US growth from the trade conflict, and that the government would take steps to protect consumers from higher tariffs.
The Buenos Aires G20 summit in December 2018 launched a five-month trade truce between the United States and China to allow for negotiations to end their deepening trade war. But those talks hit an impasse last month, prompting both sides to impose higher tariffs on each other’s goods as the conflict nears the end of its first year.
The widening fallout from the US-China trade war has tested the resolve of the group to show a united front as investors worry if they can avert a global recession.
The bickering over trade language has dashed hopes of Japan, which chairs this year’s G20 meetings, to keep trade issues low on the list of agendas at the Finance Ministersl meeting.
Mnuchin said US President Donald Trump and Chinese President Xi Jinping would meet at a June 28-29 G20 summit in Osaka. He described the planned meeting as having parallels to the two presidents’ December 1 meeting in Buenos Aires, when Trump was poised to hike tariffs on $200 billion worth of Chinese goods.
Trump took that step in May and will be ready to impose similar 25 per cent tariffs on a remaining $300 billion list of Chinese goods around the time of the Osaka summit.
At the Buenos Aires meeting, the G20 leaders described international trade and investment as “important engines of growth, productivity, innovation, job creation and development. We recognize the contribution that the multilateral trading system has made to that end.”
The leaders in that communiqué called for reform of the World Trade Organisation rules that were falling short of objectives with “room for improvement,” pledging to review progress at the Japan summit.