The significance of major economies having averted an aggravation of their antagonism and sharing concerns about the future of the world economy is not small.
The meeting of finance ministers and central bank governors from the Group of 20 major countries and regions has adopted a joint statement saying that downside risks for growth have increased due to such factors as intensified trade friction.
To mitigate such risks, they also agreed on the idea of reinforcing dialogue and cooperative action.
Economic conditions in Japan and Europe are about to reach marking time, and the Chinese economy has somewhat slowed down. There is a gradually growing uncertainty about the global economy.
If trade friction expands, it could increase anxiety among markets and corporations, thereby leaving world trade and investment stagnant.
To sustain the growth of the world economy, the G-20 group must further increase the rising momentum for cooperation.
What is essential is steadily implementing the substance of the statement and effectively calming trade friction down.
The United States is currently considering a plan to impose punitive tariffs on car imports.
The automobile business is a key industry for Japan and European countries. The adverse effects resulting from the implementation of such tariffs will likely exceed those of previous sanctions.
At the latest G-20 meeting, there was a barrage of criticism against the United States from other members of the group. In a press conference after the meeting, however, U.S. Treasury Secretary Steven Mnuchin stubbornly insisted that his nation's trade policy is not protectionist.
There are concerns that the cooperative stance shown in the statement may have been intended as a stopgap remedy.
Avoid currency crisis
At a U.S. Commerce Department hearing held last week, a string of opposing opinions were expressed not only by foreign countries but by representatives of U.S. domestic industries about punitive tariffs on car imports.
The U.S. government should listen to opinions from all corners and restrain itself from adopting additional punitive steps. Each G-20 member must persistently continue to persuade the United States of this.
The sharp drop in the Chinese yuan's value was also discussed at the meeting.
There is a view among markets that China is manipulating the foreign exchange rate. That is based on the judgment that, in reaction to trade friction, China is staging the yuan's depreciation, which provides an advantage for its export drive.
Via his Twitter account, U.S. President Donald Trump said that the weak yuan and the strong dollar, consequences of China's foreign exchange manipulation, are acting against the interests of U.S. export industries.
It is vital to avert a situation in which trade friction would even develop into a currency depreciation race, with the foreign exchange problem creating a new cause of antagonism among the G-20 economies.
It is important to more carefully watch market trends and promote close dialogue among G-20 monetary authorities.
The Chinese monetary authorities have a responsibility to clearly explain the cause of the yuan's depreciation.
The rapid progress in currency depreciation in Argentina and other emerging economies was also discussed. A massive amount of funds is flowing into the United States, which has continued to raise interest rates.
Greater caution should be exercised to prevent economic anomalies in emerging economies from triggering a currency crisis.
(From The Yomiuri Shimbun, July 24, 2018)
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