Tensions between the U.S. and China are unlikely to escalate into a
global trade war, even as geopolitical friction intensifies across Asia,
Sri Lanka’s prime minister said.
Ranil Wickremesinghe said
President-elect Donald Trump’s election pledge to bring back jobs and
revive U.S. manufacturing has more to do with Mexico than with China.
can’t see a major trade war," Wickremesinghe said in an interview with
Bloomberg on Tuesday at the World Economic Forum in Davos, Switzerland.
"Modern China is partly a creation of the U.S. And these are
interdependent economies. So what do you do?"
"He may impose some
restrictions, maybe nominally, but the Chinese have also said they will
not allow any unilateral action by USA," he added. "There may be
discussions on how the deficit can be narrowed to the U.S. advantage.
This may be the initial negotiating position. But I can’t see how they
can go beyond it."
Wickremesinghe said the
continued expansion of the Asia’s middle class presents a huge
opportunity for global investors. Chinese investments will help Sri
Lanka’s $82 billion economy expand at the fastest pace since 2012, the
central bank said recently.
At the same time, Wickremesinghe
said, China, India and Japan are trying to maintain their own spheres of
influence in the region.
"There will be some friction as they
try to assert themselves, each one having their own area of influence.
This will be more acute in the case of China and Japan, who are next to
each other," Wickremesinghe said.
There is also tension between
China and India, he said, but this is unlikely to lead to conflict
because India is focused on domestic economic reforms.
also trying to identify a role for itself in the region, they don’t want
to be challenged by others," Wickremesinghe said. "We expect this to go
on for some time, but it is not going to break out into a war."
said his country was busy trying to expand and deepen an existing trade
agreement with India, Sri Lanka’s largest trading partner, to include
various services. He said he has told China that Sri Lanka values its
relationship with India.
Indonesia’s anger over a bearish call on Indonesian equities from
JPMorgan Chase & Co., Wickremesinghe said large Asian economies such
as China, India and Indonesia were now using their new economic clout
to push back against western banks.
Indonesia’s government had
said it terminated all business relationships with the bank after the
release of a November research report that Jakarta labeled not "accurate
or credible." JPMorgan reversed its call in a January report.
a decision of the Asian countries, just using their new clout because
they feel that a lot of this is being owned out there in the west, and
it can be unfair to them," he said. "You’re going to see it more."
Wickremesinghe noted smaller countries like Sri Lanka would not take
Sri Lanka is also on track to sell a
$1.1 billion stake in a major port to China despite protests opposing
the project. Wickremesinghe said details of the Hambantota port project
will be presented to parliament in February -- it is then the total
amount of land for the port’s surrounding economic and industrial zone
would be finalized.
"That should come through. I can’t see any major impediments," he said.
have been protests against the deal in recent months, as local
villagers and Buddhist monks clash with government supporters over the
port and a surrounding economic zone.
geopolitical concerns about China’s investment in physical port
infrastructure in India’s backyard, noting that Sri Lanka’s defense
ministry and navy have responsibility for protecting the site.
"As far as security aspects are concerned, that is ours," he said. "It’s open for anyone to come and invest commercially."
(under the courtesy of srilankamirror news web)