…speaks against the trade war between US and China
WASHINGTON, DC - WITH the United States and China at loggerheads over Semiconductors, the International Monetary Fund (IMF) has sounded the warning knell that it could have serious repercussions across the globe.
The two countries have been feuding over the chips that are used to power all technology, with Taiwan being one of the main source markets that produce Semiconductors.
It is near half a trillion dollar war that is likely to have an impact across the globe from all technologies to other areas such as the fight against Climate Change
This situation has prompted the IMF to sound alarm bells of the implications for such a move by the United States to restrict China on national security grounds.
“While there can be legitimate reasons for such trade actions, either for national security reasons or to secure supply chains, they also come often with significant economic cost at home and abroad,” IMF Director of Communications, Julie Kozack said in response to a question at a press briefing on the feud between the two developed nations.
She called for countries to avoid the restrictions that could cause serious harm to others and mitigation measures in fighting major problems affecting the world.
“Critical minerals are essential to scaling up the green transition; and it is our view that countries should avoid harmful trade restrictions that would delay climate mitigation and impose unnecessary costs on other countries, including poorer nations; and, instead, policy should aim at improving infrastructure logistics and reducing trade costs,” Kovack added.
In October last year, the Biden-Administration’s Commerce Department issued a broad-based ban on the exportation of Semiconductor Chips to the Asian nation.
That move came against the backdrop of China stepping up its efforts to rollout and compete with the US in smart technologies such as Artificial Intelligence.
The ban prompted Beijing to respond by limiting the use of US chipmaker Microns chips in various projects and devices under national security risk.
Meanwhile, China’s economic challenges continue, with the IMF confirming an economic slowdown recorded based on recent data.
“On China, what we have seen recently is a slowdown in the economy since the first quarter. However, the very recent data has been a bit more mixed, with some signs of stabilization. We do continue to expect that China will meet its growth target of around five percent in 2023, and the detailed projections will be provided in our WEO update,” Kovack told reporters at the IMF Headquarters in Washington DC.
She added: “Over the medium term, we expect that China's growth will slow to around 3-1/2 percent against the backdrop of demographic headwinds and slowing productivity growth; but we also think that higher growth over the medium term is within reach for China. China should seize the opportunity to rebalance its economy through short term macroeconomic policy support and medium-term reforms.”
It is left to be seen how the continued Semiconductor war and the economic growth will impact the rest of the world which is still rebounding from the ravages of the COVID pandemic.
