(Australian Associated Press)
The trade war between the United States and China poses the single greatest threat to the global economy, the Reserve Bank governor has warned.
The trade tensions are harming global investment, wages and economic growth, Phillip Lowe told a business event in Sydney this week.
“I do not have a clear idea of what strategy the US has,” Dr Lowe said, according to Nine newspapers, citing sources who attended the meeting.
“(Some people in the US) say that it is time for Team West to muscle up against China and that is very worrying.”
But US President Donald Trump says China has to be taken on, arguing that the short term impacts are irrelevant, even if it means a local recession.
“Long term, it’s imperative that somebody does this because our country cannot continue to pay China $500 billion because stupid people are running it,” he told reporters at the White House on Tuesday.
“My life would be a lot easier if I didn’t take China on. But I like doing it because I have to do it. And we’re getting great help.
“China’s had the worst year they’ve had in 27 years, and a lot of people saying the worst year they’ve had in 54 years, OK?”
US concerns about China’s approach to intellectual property, state funding and pursuit of overseas assets are also colouring the tariffs spat.
Australia’s economy is on track to expand by between two and three per cent, but this prediction could be threatened if the trade war worsens.
Scott Morrison has offered a bleak assessment of the trade tensions, saying the world needs to get used to it.
“We’ve just got to accommodate that, we’ve got to absorb it, we’ve got to see the opportunities in it, of which there are many,” the prime minister said on Tuesday.
Mr Morrison is treading a fine line in the protracted trade war as he prepares to visit the G7 Summit in France this weekend.
China is Australia’s largest trading partner, while the US its most significant security ally.
He said given China’s economic success over the past few decades, it was time Beijing adhered to the same rules other countries faced.