World Economy

Chinese vice finance minister: Global economy challenged by uncertainty about Trump, Fed

China Vice FinMin on challenges to the global economy

Uncertainties about President Donald Trump and the Federal Reserve are major challenges for the global economy, according to a top Chinese official.

Speaking with CNBC, Chinese Vice Finance Minister Zhu Guangyao said he views questions about the U.S. as some of the primary drivers of worldwide economic doubt.

"Internationally, I think the big challenge is uncertainty. So I see some uncertainty firstly is the Trump administration economic policy, that is, what will happen and what impact to the US economy and the global economy," he said.

"Second uncertainty certainly is the Federal Reserve: How they will make the decision for interest rates. And the most challenging situation is anti-trade and some (cases happening) with geopolitical risk."

Zhu said the Chinese government is focused on maintaining communication between itself and the U.S. administration. That's why, he said, the February call between Trump and Chinese President Xi Jinping — in which the U.S. leader agreed to honor the "One China" policy — was "very important."

As for Trump's threats to officially label China a currency manipulator, Zhu struck a neutral tone.

"We hope that (judgment about a manipulator label) should be based on reality and also the U.S. Treasury has their three conditions. They have their judgment. We have our judgment. We keep very close communications day by day," he said.

This picture taken on March 2, 2017 shows a man searching rubbish bins in front of an news stand advertising a Chinese newspaper with the front page photo of U.S. President Donald Trump.
Johannes Eisele | AFP | Getty Images

Speaking with CNBC last month, U.S. Treasury Secretary Steven Mnuchin touched on that question of judgment: "We have a process within Treasury where we go through and look at currency manipulation across the board," Mnuchin said. "And we'll go through that process."

"We'll do that as we have in the past, and we're not making any judgments until we continue that process," the Treasury secretary added.

According to rules adopted during Barack Obama's administration, China would need to meet three standards to officially be deemed a currency manipulator:

  1. A significant bilateral trade surplus with the United States is larger than $20 billion
  2. A material current account surplus is larger than 3.0 percent of GDP
  3. Persistent, one‐sided intervention includes net purchases of foreign currency, conducted repeatedly, totaling in excess of 2 percent of an economy's GDP over a 12 month period.

Addressing the issue of trade, Zhu said it was "unreasonable" to blame China for the rise of protectionism and anti-trade sentiment in parts of the U.S. and Europe. International trade, he said, "benefits both sides."

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