Top G-20 Finance Officials Concerned over Trade Friction

July 23, 2018

Buenos Aires- Top finance and monetary officials from the Group of 20 advanced and emerging economies warned on Sunday that escalating trade friction could increase risks to the growth of the world economy.

In a communique released after their two-day meeting in Buenos Aires through the day, the officials also reconfirmed last year's G-20 summit declaration that showed opposition to protectionism.

This was the first G-20 meeting since the United States and China, the world's two biggest economies, went into tit-for-tat trade war recently.

"Global economic growth remains robust, and unemployment is at a decade low," the G-20 finance ministers and central bank chiefs said in the communique.

"However...downside risks over the short and medium term have increased," they said, noting, "These include rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances, inequality and structurally weak growth, particularly in some advanced economies."

They stressed, "We will continue to monitor risks, take action to mitigate them and respond if they materialize."

"We reaffirm our leaders' conclusions on trade," displayed in their joint declaration adopted at their summit in Hamburg, Germany, in July last year, and "recognize the need to step up dialogue and actions to mitigate risks and enhance confidence," the finance chiefs and top central bankers said.

Pointing out that international trade and investment are "important engines" of growth, productivity, innovation, job creation and development, the officials said, "We are working to strengthen the contribution of trade to our economies."

The July 2017 statement underscored the G-20 leaders' intention to "continue to fight protectionism."

Discussions on trade friction subsided somewhat, Japanese Finance Minister Taro Aso said at a press conference after the latest meeting, indicating that participants in the Buenos Aires gathering tried to avoid confrontation over the matter.

On recent slumps of the currencies of some emerging economies, including China's yuan, the Buenos Aires communique said that many emerging economies "still face challenges including market volatility and reversal of capital flows" although they are now better prepared to adjust to changing external conditions.

The G-20 officials said that they "reaffirm" their exchange rate commitments made at their meeting in the Argentine capital in March, reiterating the importance of currency market stability and the need to refrain from competitive devaluations.

Over foreign exchange rates, U.S. President Donald Trump, just before the G-20 meeting, criticized China and the European Union for having manipulated their currencies.

During the first-day discussions of the G-20 meeting on Saturday, Aso asked China about reasons for the yuan's recent fall, according to sources familiar with the talks. In response, the Chinese side explained that yuan exchange rates have been determined according to the supply-demand balance, the sources said.

The G-20 members are the Group of Seven advanced countries--Britain, Canada, France, Germany, Italy, Japan and the United States--and Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey and the EU. Jiji Press