Can the US economy grow without a China trade deal?


MANIPULATOR. BEIJING AND WASHINGTON STILL IN THE TRADE STALEMATE WITH CHINA DIGGING IN FOR A DRAWN OUT FIGHT. THIS COMES AS NEW DAY A TAKE FROM THE TREASURY DEPARTMENT SHOWS THE U.S. COLLECTED $63 BILLION SO FAR IN TARIFFS SINCE JUNE OF LAST YEAR. JOINING ME RIGHT NOW, WORLD BANK GROUP PRESIDENT DAVID MALPASS TO TALK MORE ABOUT ALL OF THAT. IT’S GREAT TO SEE YOU THIS MORNING. THANKS SO MUCH FOR BEING HERE.>>HI, MARIA. GOOD TO BE ON. MARIA: HOW SHOULD WE VIEW WHAT’S GOING ON WITH CHINA? WE KNOW THAT NOW THE CHINESE ARE TRYING TO LIMIT THE DECLINES BY KEEPING THAT SEVEN LEVEL IN THE YUAN. BUT THE PRESIDENT AND TREASURY HAS CALLED THEM OUT AS THE CURRENCY MANIPULATOR. WHAT SHOULD VIEWERS UNDERSTAND?>>I’M NOT INVOLVED IN THE FX POLICIES AT THIS POINT BUT WHAT I CAN OBSERVE IS THAT CHINA HAS SLOWED SOME AND THE STATEMENTS THAT THEY’VE BEEN MAKING HAVE BEEN IN THE DIRECTION OF STABILIZATION. I THINK THAT’S GOOD. THEY ARE PART OF THE G- G-20COMMUNICA THAT COMES OUT WHEN THE G-20 MEETS. IT’S TO RECOGNIZE THE GROWTH AND INVESTMENT FROM CURRENCY STABILITY IN GENERAL. CHINA IS FULLY PART OF THAT AS A CONCEPT OF GROWTH. I THINK THAT’S GOOD. BUT CLEARLY, THEY FACE A LOT OF CHALLENGES IN THEIR INTERFACE WITH THE REST OF THE WORLD. THEY HAVE STATE-OWNED ENTERPRISES. THEY’VE GOT BASICALLY STILL IN MANY WAYS NONMARKET ECONOMY THAT’S BEEN TRYING TO MOVE MORE TOWARDS MARKETS BUT HAS A LOT OF ROOM TO GO. MARIA: CAN THE U.S. GROW WITHOUT A DEAL FROM CHINA? I MEAN T TWO I MEAN THEWO I MEAN THE TWO LARGEST ECONOMIES, DO YOU EXPECT THAT — LET’S SAY WE DON’T GET A DEAL WITH CHINA, THAT THE U.S. IS GOING TO BE AT A DISADVANTAGE?>>YOU KNOW, I WAS HEAVILY INVOLVED IN THE TRADE DISCUSSIONS, SO I DON’T WANT TO SPECULATE ON THE DEAL. BUT FROM THE STANDPOINT OF U.S. GROWTH, IT’S HELD UP WELL. A CHALLENGE FOR THE WORLD IS GROWTH OUTSIDE THE U.S. HAS SLOWED DOWN. YOU MENTIONED AT THE TOP OF THE SHOW THE INDUSTRIAL PRODUCTION IN GERMANY DOWN 1%, 1.5% AND SO EUROPE HAS BEEN SLOW AND ADDING TO THAT CHALLENGE IS THE AMOUNT OF NEGATIVE INTEREST RATE BONDS THAT ARE SITTING ON THE ECONOMY. I THINK THOSE ARE A BIG DRAG WHEN YOU’VE GOT A POLICIES THAT END UP WITH NEGATIVE INTEREST RATES. MARIA: THREE CENTRAL BANKS OVERNIGHT LOWERED INTEREST RATES, NEW ZEALAND, THAILAND, INDIA AND THEN YOU’VE GOT THE GLOBAL MONETARY POLICY BASICALLY IS LOW. THE EU NOMINATING CHRIS SALENA JORJVA TO MANAGE THE IMF. WHAT ARE YOUR THOUGHTS ON THE CHANGES THAT WE’RE SEEING AS ECONOMIES ACROSS THE WORLD BASICALLY HAVE THIS RACE DOWN TO ZERO ON INTEREST RATES?>>WELL, LET ME START WITH CHRISTALINA, SHE’S BEEN MY CEO FOR THE WORLD BANK. I KNEW HER QUITE WELL BEFORE I CAME TO THE WORLD BANK AND THOUGHT VERY HIGHLY OF HER AND MY OPINION HAS GONE EVEN HIGHER IN WORKING WITH HER VERY CLOSELY OVER THESE LAST FEW MONTHS. SO I THINK IT’S GOOD CHOICE FOR EUROPE. IT BRINGS IN A SMALL EASTERN EUROPEAN COUNTRY LEADERSHIP THAT HAS BEEN VERY STRONG. THE EASTERN EUROPE HAS BEEN A SUCCESS STORY WITHIN THE DEVELOPING WORLD AND SHE’S VERY GOOD AT FINANCE, AT COUNTRY, AT DONE INDUSTRY CONE INDUSTRY COUN INDUSTRY COUNTRNDUSTRY COUNTRYDUSTRY COUNTRY USTRY COUNTRY UNDRY COUNTRY UNDERSTANDING AND RELATIONSHIPS AROUND THE WORLD. I THINK IT’S A GOOD CHOICE FOR THE IMF. WITH REGARD TO THE INTEREST RATE POINT THAT YOU MADE, ONE OF THE CHALLENGES IS THAT CENTRAL BANKS ARE STILL BUYING A LOT OF THESE LOW INTEREST RATE BONDS. SO THE EUROPEAN CENTRAL BANK IS STILL BUYING BONDS, EVEN THOUGH THE YIELDS ARE SUPER LOW. AND SO ONE OF THE CHALLENGES THAT POSES IS IT BENEFITS THE UPPER END OF THE ECONOMY. GOVERNMENTS ARE THE ISSUERS OF MOST OF HE MOST OF TE MOST OF THESE BONDS SO YOU HAVE THE ODD SITUATION WHERE UNDER THE REGULATORY POLICY, GOVERNMENTS ARE FAVORED AND UNDER THE CENTRAL BANK POLICY GOVERNMENTS ARE FAVORED. AND SO IT’S NOT IDEAL. IT’S NOT AN IDEAL POLICY FROM THE STANDPOINT OF TRYING TO BRING INCLUSIVE GROWTH, PEOPLE UP FROM THE BOTTOM WHICH IS A WORLD BANK OBJECTIVE. MARIA: WHAT DO YOU THINK THE IMPACT OF CHRISTINE LAGARDE COMING FROM THE IMF GOING TO THE ECB WILL BE? THESE GOING TO BECOME THE PRESIDENT OF THE EUROPEAN CENTRAL BANK. THERE’S BEEN COMMENTARY ABOUT THAT, SAYING SHE’S NOT AN ECONOMIST. SHE’S MORE OF A POLITICIAN. WHAT KIND OF A SENTIMENT WILL THAT BRING WITH HER IN THE CHAIR AT THE ECB IN TERMS OF STIMULUS? WILL SHE BUY EQUITIES, FOR EXAMPLE?>>I DON’T KNOW WHAT HER POLICIES WILL BE. BUT I KNOW THAT SHE REALLY IS LOOKING TO HAVE A EUROPE THAT CAN GROW FASTER. YOU KNOW, THEY’VE REALLY SLOWED AND THEY DON’T HAVE THE POLICY REFORMS THAT WOULD MOVE THEM FORWARD. ONE THING I’VE LEARNED OVER THIS 40 YEARS DOING DEVELOPMENT ECONOMIES IS LEADERS MATTER AND THE POLICIES MATTER. THEY HAVE A CHOICE OF WHETHER THEY WANT TO CHANGE TO MORE GROWTH ORIENTED POLICIES. SO ONE OF THE CHALLENGES IS FOR EUROPE TO FIND THAT DIRECTION AND GET OUT OF THE RUT THAT THEY’RE IN. MARIA: YOU’RE RIGHT. BUT AREN’T THESE ISSUES AROUND FUNDAMENTAL FEDERAL POLICY AS OPPOSED TO — TALKING ABOUT NATIONAL POLICIES, AS OPPOSED TO OF MONETARY POLICY, RIGHT. SHE’S TAKING THE HELM AT THE ECB. THERE ARE ISSUES AROUND LABOR, AROUND THE WORKWEEK IN EUROPE, I MEAN, THOSE ARE POLICIES THAT WOULD LIKELY BE DEALT WITH COUNTRY BY COUNTRY AND ISN’T THAT THE REAL PROBLEM?>>AND ALSO THE EUROPEAN UNION. SO SOME OF IT IN EUROPE IS COUNTRY BY COUNTRY AND THEN THERE’S ALSO THE ISSUE OF DOES THE EUROPEAN UNION AS A GROUP CHOOSE A DIRECTION THAT’S MORE TOWARD GROWTH. YOU’RE RIGHT THAT IT’S — A LOT OF IT IS TO DO WITH STRUCTURAL REFORM. THE CENTRAL BANKS ARE TRYING TO HAVE — PROBABLY TRYING TO HAVE A MONETARY POLICY THAT FITS IN WITH THE EUROPEAN POLICIES OF THE NATIONS. SO EVERYONE CAN ENCOURAGE THAT DIRECTION OF MORE GROWTH, NOT ONLY IN EUROPE, BUT IN CHINA AND I WORK A LOT ON DEVELOPING COUNTRIES. IN FACT, MOST OF MY TIME ON THAT. AND I’D LIKE TO SEE COUNTRIES DO MUCH BETTER, GOOD DEVELOPMENT OUTCOMES IS A GOAL. THAT MEANS INCLUDING WOMEN, FOR EXAMPLE, IN THE ECONOMY. I’VE BEEN HAPPY TO SEE SOME OF THE POSITIVE CHANGES IN THAT DIRECTION. THAT REQUIRES LEGAL REFORMS BY GOVERNMENTS THAT THEN ALLOWS AND ENABLES A BETTER ENVIRONMENT FOR GROWTH. MARIA: WHAT ELSE HAVE YOU BEEN WORKING ON AT THE WORLD BANK. GIVE US YOUR PRIORITIES.>>WELL, PRIORITY IS GOOD DEVELOPMENT OUTCOMES. I’D LIKE TO SEE QUITE A FEW COUNTRIES AROUND THE WORLD DO BETTER, AND DO WELL. THAT MEANS MORE INVESTMENT AND THAT USUALLY MEANS A BETTER PRIVATE SECTOR ENVIRONMENT AND YOU CAN LOOK AT EACH PART OF A COUNTRY’S LEGAL SYSTEM AND SAY WHAT IS IT THAT’S NOT ENCOURAGING ENOUGH FOR PRIVATE SECTOR INVESTMENT. SO WE HAVE A LOT OF PEOPLE LOOKING AT THE SPECIFIC POLICIES OF COUNTRIES AND THEN WORKING WITH THE COUNTRY TO TRY TO FIND BETTER PATH FORWARD. ONE GOOD NEWS I’LL POINT OUT IS AROUND THE WORLD MANY DEVELOPING COUNTRIES OR SEVERAL HAVE FOUND GOOD, STRONG LEADERS THAT REALLY WANT TO MAKE CHANGES IN THEIR COUNTRY AND BRING PEOPLE UP FROM THE BOTTOM, ALLOW PRIVATE SECTOR GROWTH IN THEIR COUNTRIES AND SO I’M ENCOURAGED BY THAT. THERE ARE OPPORTUNITIES TO TAKE — FOR THE WORLD TO ENCOURAGE AND TAKE ADVANTAGE OF IT THERE. MARIA: WE’LL SEE. IT’S BEEN CERTAINLY TOUGH FOR EUROPE TO GENERATE ANY GROWTH. SO WE’LL SEE IF ANY POLICIES CHANGE. DAVID, IT’S GOOD TO SEE YOU THIS MORNING.

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