US-China tensions 'threat' to world economy: IMF chief

Paris

THE head of the International Monetary Fund said on Tuesday that fresh trade tensions between the United States and China were the main threat to the world economy. "Clearly the tensions between the United States and China are the threat for the world economy," Christine Lagarde told journalists at a conference in Paris, adding that recent "rumours and tweets" made an agreement between the countries less likely.

US President Donald Trump jolted global markets on Monday by threatening on Twitter that tariffs already imposed on US$200 billion in Chinese exports to US would more than double to 25 per cent on Friday from their current level of 10 per cent.

Also speaking at the Paris Forum event, French Economy Minister Bruno Le Maire warned about the impact of a trade war between the world's two biggest economies. "We are looking very carefully at the current negotiations between China and the US. We want these negotiations to stick with principles of transparency and multilateralism," he said, speaking in English.

He called on the two sides to "avoid decisions that would threaten and jeopardise world growth in the coming months". "Raising tariffs is always a deadlock and a negative decision for everybody - for the US, for China, for the eurozone, for Europe and for growth all over the world," he said.

Mr Le Maire cautioned that during a period of slowdown in world growth there should not be "negative decisions that could accelerate that slowdown". China said on Tuesday that its top trade negotiator will visit the United States for talks with his American counterparts this week.

The countries have been locked in talks to resolve tensions that have seen both of them impose tariffs on goods worth US$360 billion.

Treasury Secretary Steven Mnuchin has described the negotiations as 90 per cent complete but told reporters that in recent days the talks went "substantially backward", which he blamed on China reneging on previous commitments. AFP