There's no inherent conflict in a rising world power like China assuming leadership alongside an established power like the United States, former U.S. Treasury Secretary Jack Lew. stressed on Thursday.
In fact, it is crucial for the world's two largest economies to work together, he said.
Still, China has to take on more responsibilities if it wants to play more of a leadership role, the former Obama administration official said at the OCBC Global Treasury Economic and Business Forum in Singapore.
“I don't accept the thesis that there's an inherent conflict between the U.S. and China where the established power has to prevent the rising power from assuming a leadership role. I think the U.S. can most effectively navigate that when we stand on principles that are broadly accepted,” he said.
Lew, who headed the U.S. Treasury from 2013 until the 2017 end of Barack Obama's tenure in the White House, warned, however: “I think, if the U.S. becomes an outlier, which has increasingly been happening with things like trade policy ... it becomes more difficult.”
On Tuesday, President Donald Trump's administration released a list of Chinese goods with an annual trade value of about $200 billion that may be subjected to 10 percent tariffs. That followed warnings by Trump that he could implement tariffs on at least $500 billion in Chinese goods should Beijing retaliate against the U.S. tariffs hitting $34 billion worth of Chinese goods that kicked in onJuly 6. Despite the president's threat, China implemented retaliatory tariffs on the U.S. shortly afterward.
There's no doubt, Lew said, Trump is playing into the popular sentiment that the country has lost out because of unfair competition. But that does not mean that current administration's trade policies will help the U.S. economy, he warned.
Commenting on the U.S.-China relationship, Lew said: “Focusing on trade deficit ... misses the point. The real point is, is China open to U.S. products? Is China open to U.S. investment coming in? Does China have policies that are fair in terms of intellectual property so that American businesses don't have to take steps that essentially gives their intellectual property away when doing business in the Chinese market?”
He said that, because of sustained engagement over the years, there has been progress made on all of those issues — and there is more to be made.
“The key is for the U.S. to be ... taking a position that is both the correct position for the U.S. And respected internationally,” he concluded.
Trump has come up against criticism from both allies and international rivals for his threatening approach to renegotiating U.S. trade deals.