The top White House economist said Wednesday that he’s hopeful that China’s struggling economy will bring the Trump administration and Beijing closer to resolving their trade war.
Kevin Hassett, chairman of the White House Council of Economic Advisers, argued on CNBC Wednesday that China should be eager to strike a trade deal with the U.S. because it would benefit the country’s lagging economy.
Hassett said the Chinese economy could rebound quickly with help from the U.S., touting the Trump administration’s recent renegotiation of the North American Free Trade Agreement and a trade deal with South Korea.
“If something like that happens with China, then everything in China is going to turn around on a dime and we’re hopeful that's the scenario that they keep in mind,” Hassett said.
"We’re all at the White House hopeful that talks can resume and that we can move to a positive place with China."
The fraught relationship between the U.S. and China soured even further over the summer amid mounting trade and geopolitical tensions between the two rivals.
Trump last month imposed tariffs on $200 billion in Chinese exports, piling onto the $50 billion implemented earlier this year. China responded with tariffs on $60 billion in U.S. goods, targeted crops and livestock that underpin red-state economies.
Trump and Vice President Pence have also accused China of taking action to sway the 2018 midterm elections against the Republican Party, a stunning claim with potentially dire implications for Washington’s relationship with Beijing.
U.S. and Chinese officials have ruled out further negotiations over tariffs as both countries dig in for a protracted trade war. The Trump administration is seeking to halt Chinese intellectual property theft, investment restrictions and other trade barriers imposed by Beijing.
“China needs to stand up and become a grown-up member of the [World Trade Organization], a grown-up member of the club of developed nations and stop doing things like forced technology transfer and the rest,” Hassett said Wednesday.
“If they don’t, you know, behave a little better,” Hassett added, “this could continue longer.”
The growing U.S. economy is better positioned than China to withstand a trade war, giving the Trump administration added leverage in negotiations. But Hassett said he agreed with the International Monetary Fund’s recent forecast of lower global growth due in part to the trade tensions.
Hassett also said that turmoil in Turkey, Argentina, Venezuela and other emerging markets was the “biggest” risk to the world economy and could depress global economic growth.
The Federal Reserve’s recent interest rate hikes have driven global borrowing costs higher, which hit emerging markets and developing economies the hardest. Trump urged the Fed to slow down on Tuesday, questioning why the central bank would seek to restrain the economy.
Trump said Tuesday that inflation in the U.S. had not risen high enough to justify Fed rate hikes. His comments were his latest breach of two decades of silence on monetary policy from the White House.
Hassett said Wednesday that the White House respects the Fed’s independence and sought to avoid commenting on monetary policy in deference to the central bank. But Hassett said that he believes that investments in productivity and capital spurred by the 2017 tax-cut bill would stave off inflation.