The International Monetary Fund says that: Tensions between Beijing and Washington will divide the world into two hostile economic blocs

The Managing Director of the International Monetary Fund, Kristalina Georgieva, warned in an interview with The Washington Post.

Georgieva noted efforts by Washington and the European Union to redesign global supply chains, eliminating dependence on a single resource: China. In addition, the introduction of trade barriers in order to gain an advantage in the context of geopolitical competition, could set off a devastating cycle that would affect poor and middle families, leaving the rich unscathed.

The IMF chief noted that diversifying supply chains after the Covid-19 pandemic made some sense. But he added that when it goes “beyond economic logic, it will be detrimental to the United States and the rest of the world.”

“I am concerned about the increasing fragmentation of the global economy,” Georgieva went on, and believes that this trend will lead to a “poorer and less secure world.”

higher prices

In this sense, he said, provoking a new Cold War would be “completely irresponsible.” In a global economy fragmented into competing blocs, global activity will contract by 1.5%, or more than $1.4 trillion annually. The losses would double in percentage terms for Asia, the center of production of electronics, apparel and industrial goods.

Annual trade between the United States and China is still significant, exceeding $600 billion. Their economies are so intertwined that, according to Georgieva, complete disintegration is impossible. Thus, he stated that the tariffs Washington began to impose since 2018 on Chinese imports are an example of counterproductive policies.

In this regard, the agency director stressed that the tariffs did not reduce the US trade deficit with China, but rather made the residents of the United States pay higher prices for Chinese products. “It’s important to think carefully about the actions and responses it can provoke, because once you let the genie out of the bottle, it’s hard to get it back,” he added.

(taken from RT in Spanish)