The head of the World Trade Organization has pledged to mediate between the US and China as fears grow that the escalating trade conflict between the world’s two biggest economies could lead to a full-scale global trade war.
Roberto Azevêdo, the WTO’s director general, said his Geneva-based body had “dedicated itself” to forcing Washington and Beijing into a dialogue.
Speaking at an event in Rio de Janeiro, Azevêdo said he was “very concerned” at the prospect of a trade war between the two countries.
“To be honest, I don’t think it’s over. They have lots of ammunition and it can expand to other areas beyond just tariffs ... and trade.” He did not elaborate.
Azevêdo’s move came as financial markets responded positively to signs that China wants to halt the drift towards protectionism, with the latest round of tit-for-tat tariffs imposed this week.
Li Keqiang, the Chinese premier, used a keynote speech to a meeting of the World Economic Forum (WEF) in the Chinese port of Tianjin to seek to portray his country as the defender of open markets.
“It is essential that we uphold the basic principles of multilateralism and free trade,” Li said. “No unilateralism will offer a viable solution.”
Li also warned that the world economy stood at “a crossroads, with a choice between globalisation or deglobalisation”. He pledged China would do its bit by opening up “at a faster pace”.
China’s second most important politician also insisted that Beijing had not been deliberately weakening its currency to make its exports weaker, and had no intention of manipulating the yuan downwards in the future either.
“Recent fluctuations in the renminbi [yuan] exchange rate have been seen as an intentional measure, but that isn’t true, Li said. “One-way devaluation will do more harm than good to China’s economy. China will by no means stimulate exports by devaluing the yuan.”
Li’s speech was seen as the latest attempt by China to take the heat out of the trade dispute. This week, Beijing responded to Donald Trump’s plan to impose tariffs on $200bn of Chinese goods with its own list of $60bn of US products to be targeted, in a much milder response than had been expected.
Throughout Trump’s presidency, China has sought to portray itself as being reluctantly caught up in a conflict orchestrated by the White House.
In the week when Trump was inaugurated in January 2017, China’s leader Xi Jinping used a speech to the WEF’s annual meeting in Davos to warn that no one would be the winner in a trade war.
However, some trade analysts believe that China’s emollient attitude reflects the fact that it is rapidly running out of US goods to target, given the imbalance in trade between the two countries.
