G20 countries should consider more trade barriers on China to cut imbalances
ASHEVILLE, North Carolina: US Treasury Secretary Scott Bessent said on Sunday he will encourage G20 members to re-examine terms of trade with China to shrink global imbalances and press Beijing to rebalance its economy away from exports and toward domestic consumption.
US Treasury Secretary Scott Bessent has urged G20 nations to reassess their trade relations with China in order to address global imbalances and encourage Beijing to shift its economy away from exports and towards domestic consumption. Speaking ahead of a G20 finance leaders meeting, Bessent expressed concern over China's current trade surplus of US$1.2 trillion, stating that the world cannot sustain such a surplus.
He emphasized that China's economy is weak and its dependence on exports is unsustainable. Bessent's call for a coordinated trade response to China comes amid legal setbacks that have forced the US to rebuild its tariff policy, which initially targeted Chinese imports but has led to an influx of Chinese goods into other countries, particularly Europe and Latin America.
The US has implemented high tariffs and outright bans on certain Chinese products, including automobiles. Bessent warned that other industrial economies faced significant challenges due to the surge in Chinese imports and that they now have to make difficult choices. He stressed that it is up to other countries to incentivize China to reduce its reliance on exports and strengthen its weak domestic demand.
Bessent also noted that other nations must examine their trade terms with China. The US has seen a third reduction in its trade deficit with China since the start of 2025, dropping to US$73.9 billion for the first six months of the year, according to US Census Bureau data. However, Bessent questioned the effectiveness of efforts to strengthen the Chinese yuan, arguing that the International Monetary Fund's assessment of the currency being undervalued by up to 21% is insufficient to address the trade imbalance.
The imbalance, he believes, is primarily driven by Chinese industrial subsidies and weak domestic demand. While a US- China summit is planned for late September, it remains unclear whether Bessent will meet with his Chinese counterpart, Vice Premier He Lifeng, in person. Ahead of the summit, US and Chinese officials will discuss potential tariff reductions on non-strategic goods and address AI guardrails.
Bessent suggested that there might be US$30 billion worth of non-critical goods where tariffs could be removed, with the upcoming summit focusing on rebuilding Trump's tariffs that were struck down by the US Supreme Court and a new investigation targeting excess industrial capacity.
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