'Collateral damage' from US-China trade war not limited to two countries, threatens global economy, warns Australian PM

Sydney: Australian Prime Minister Scott Morrison on Wednesday warned that “collateral damage” from trade spats between China and the United States were hurting smaller countries and threatening the global economy. In a usually public warning to allies in Washington, Morrison said the “world’s most important bilateral relationship—the US-China relationship” had become “strained”.

[caption id=“attachment_6661351” align=“alignleft” width=“380”] File image of Australian Prime Minister Scott Morrison. Reuters[/caption]

“Trade tensions have escalated. The collateral damage is spreading. The global trading system is under real pressure. Global growth projections are being wound back,” he said, speaking in Sydney. “The impact of any further deterioration of the relationship will not be limited to these two major powers,” he added.

His comments come on the eve of a G20 summit in Osaka, Japan, that will be overshadowed by talks between Chinese President Xi Jinping and US counterpart Donald Trump aimed at easing tensions between the world’s two largest economic powers.

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Decades of cautious engagement between China and the United States have been cast aside in the Trump-Xi era, replaced by two geopolitical behemoths openly tussling for economic, diplomatic and military influence. In Australia, that has caused a dramatic erosion in confidence about both Washington’s and Beijing’s willingness to act responsibly in the world.

According to a poll released by respected Sydney think tank the Lowy Institute on Wednesday, only 32 percent of Australians say they trust China—a 20 point fall versus 2018. Just 25 percent of respondents said they had confidence in Trump.

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Morrison’s conservative government was re-elected in May, largely on promises of continuing the Australian economy’s almost 28 years of near-continuous growth. But that growth is starting to falter, and with a downturn looming, his government has played up the negative impact of an external shock from US-China tensions.

Economists say that is more of a risk for the future, blaming current woes on structural weaknesses at home. Morrison is a vocal supporter of Trump and is expected to hold a meeting with the US leader on the sidelines of the G20 summit, where China’s growing influence in the South Pacific is sure to come up.

Australia is reportedly planning to build a new deep-water port on its northern coast able to accommodate US Marine deployments as part of efforts to counter China’s presence in the region. The two men may also discuss a presidential visit. Since coming to office in early 2017 Trump has yet to visit Australia—a major military and intelligence partner.