An important fallout of the G-20 summit held in Argentina last Friday and Saturday has had the immediate fallout of averting important trade — and consequently economic — dislocations on a global scale, thanks to a degree of realism shown by US President Donald Trump and China’s leader Xi Jinping.
Mr Trump agreed not to impose the threatened raising of tariff from 10 per cent to 25 per cent on $200 billion worth Chinese imports to America as the Chinese President agreed in turn to expand purchases from the US. The two countries have given themselves three months in which to reach broader and deeper understanding on matters relating to trade access.
The timetable seems ambitious to many as a proper agreement on such contentious matters have eluded US and Chinese negotiators for the past two years, but possibly the lowering of hostility as a result of the immediate understanding reached in Buenos Aires will facilitate the process.
A full-scale trade war between the world’s two largest economies cast a shadow on global commerce and international economics. Open conflict is likely to have lowered economic results for both sides, with China being hit considerably more.
This would have impacted world trade as reduced economies of the US and China would have led to reduced sales of goods and services from other countries to these two, in turn affecting the economies of the world. For now, therefore, world trade and financial systems can breathe a little easier.
G-20 is a gathering of the world’s 19 largest economies, besides the European Union. At the annual summit of these nations is reviewed the international economic and security climate, with the forum providing an opportunity for leaders of the key nations to look at specific issues that may pertain to groups of them.
Prime Minister Narendra Modi had two sets of consequential trilateral meetings — one with leaders of the US and Japan, and the other with Russia and China. Mr Modi and Mr Xi agreed in their interaction that after their informal summit in Wuhan earlier this year the security situation between their countries had eased. To the extent that this is a realistic evaluation, such an outcome is naturally to be welcomed.
In the meeting of the leaders of India, Japan and the US, the focus was on strengthening security and freedom of navigation in the Indo-Pacific, where China is the elephant in the room. India has to do the balancing act between managing ties with China and being in the company of another set of powerful nations that are wary of the projection of Chinese power in the oceans to China’s south and east, a challenge which is of a long-term nature.
