Lagarde: with trade divided into blocs damage for all
Speaking at the People's Bank of China in Beijing, the ECB President explained that 'if we really want to preserve our prosperity, we have to pursue cooperative solutions, even in the face of geopolitical differences. This means that both surplus and deficit countries must assume their responsibilities and do their part'.
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"If global trade were to be fragmented into competing blocs, trade would contract significantly and each of the major economies would be worse off". ECB President Christine Lagarde said this - implicitly referring to the idea that the Trump administration intends to pit a Western trade bloc against a Chinese-led one - during her address to the People's Bank of China in Beijing. "To safeguard prosperity we must pursue collaborative solutions, even in the face of geopolitical differences," Lagarde said, "and this means that both surplus and trade deficit countries must play their part.
"To the extent that protectionism addresses imbalances, it does so not by solving the root causes, but by eroding the foundations of global prosperity. And with countries now deeply integrated through global supply chains, but no longer geopolitically aligned as in the past, this risk is greater than ever. Coercive trade policies are much more likely to provoke retaliation and lead to mutually damaging outcomes,' Lagarde added.
The ECB president signed a memorandum of understanding with the governor of the People's Bank of China Pan Gongsheng for cooperation in central banking activities. The agreement, which updates the 2008 agreement, "includes a framework for regular information exchange, dialogue and technical cooperation between the two institutions". "It is important to support global cooperation," Lagarde said, calling the agreement signed with Governor Pa "a sign of our continued dialogue with the People's Bank of China".
