China prevented G-20 communique over imbalance trade spat, says US’ Bessent

ASHEVILLE, North Carolina – US Treasury Secretary Scott Bessent said that China prevented the Group of 20 (G-20) from issuing a joint communique after a gathering of finance and central bank chiefs this week, due to a dispute over its giant trade surplus.“The country with the world’s largest and unsustainable current account surplus, the People’s Republic of China, was the dissenter,” Bessent said at a press conference at the G-20 gathering in Asheville, North Carolina on Sept 1.“Non-market based economies pushing out a never-ending spring of cheap exports is not sustainable.”As has become a regular practice since the G-20 differed over Russia’s 2022 invasion of Ukraine, there was – instead of the once-traditional communiques – a statement in the voice of the chair. “Countries with excessive and persistent external surpluses should remove distortions that constrain domestic consumption and that result in an overreliance on exports for growth,” the G-20 chair statement, released by the US Treasury, said.“These policies and practices result in harmful spillovers to global, regional, and domestic markets and increase economic dependency.”Bessent said that 19 of the G-20 backed the chair’s statement.The Treasury released the chair’s statement shortly after Bessent’s remarks.The statement said that China specifically dissented to the paragraphs that focused on the open flow of ships through the strait of Hormuz, the creation of a task force to further study and alleviate trade imbalances, the IMF’s powers to surveil trade imbalances and provisions tied to debt restructuring.China saw a record trade surplus of US$1.2 trillion (S$1.53 trillion) in 2025, a 20 per cent increase from 2025, and Bessent had made the issue a key priority throughout the G-20 summit of finance ministers and central bank governors.The US had a trade deficit of roughly US$200 billion with China in 2025, Bureau of Economic Analysis data show.Bessent said he had some “limited” exchanges on artificial intelligence with China’s representatives at the G-20, noting that his main counterpart, Vice-Premier He Lifeng, was not at the gathering, which assembled finance ministers and central bank governors.Bessent said he expected AI will be a topic when President Xi Jinping comes to the US to meet with President Donald Trump – expected in September.The Treasury chief also said that he views the capital-spending surge on AI as a prelude to a pickup in productivity that will then prove disinflationary.The process of putting downward pressure on prices potentially may start in six months, he said.“This capex will turn into productivity, and that will be extremely disinflationary,” Bessent said about the hundreds of billions being invested into AI right now. “I would guess that in the next six months we will start seeing the benefits of that.” Iran effortsThe Treasury has also taken a central role in the US’ war in Iran, and Bessent announced plans to further economically isolate Iran through sanctions last week.During the G-20, Bessent said he spoke about potential economic actions on Iran with allies, Russia and China – which purchases 90 per cent of Iran’s oil.Bessent said that the US and China agree on the importance of keeping the Strait of Hormuz open.Bessent’s comments come as the US and Iran traded tit-for-tat strikes on both Aug 31 and Sept 1.The Treasury chief said there may be more strikes from Iran in the coming days. “Will they lash out more kinetically, maybe, but they will be ready for a deal,” Bessent said. BLOOMBERG