US-China talks ‘good for world economy’, IMF says as trade thaw gains momentum – Firstpost

The International Monetary Fund (IMF) welcomed renewed engagement between the United States and China, describing the latest round of high-level dialogue between US President Donald Trump and Chinese President Xi Jinping as a positive development for global economic stability, even as geopolitical risks and energy market pressures continue to cloud the outlook.

Speaking at a press briefing on Thursday, IMF spokesperson Julie Kozack said the Fund views sustained communication between Washington and Beijing as essential for reducing uncertainty in the global economy.

“It’s very important, of course, that the world’s two largest economies are engaging at the highest level,” Kozack said. “We certainly welcome the fact that there’s a constructive dialogue between the two countries. Anything that is going to help reduce trade tensions and reduce uncertainty is good for both of those large economies, and, of course, good for the global economy as well.”

The comments come at a time when the two countries are attempting to stabilise relations after years of tariff escalations, retaliatory trade measures and widening strategic competition that disrupted global supply chains and weighed on investment sentiment.

The latest round of discussions in Beijing reportedly included talks on trade flows, investment coordination and sectoral cooperation. Trump, in a televised interview, said China had agreed in principle to
purchase 200 Boeing aircraft, while US officials indicated that energy and agricultural exports were also part of the broader negotiating framework.

The IMF has for years urged both economies to resolve disputes through structured dialogue rather than unilateral tariff actions, warning that prolonged fragmentation between the world’s two largest economies carries spillover risks for global growth, inflation and financial stability.

While the tone of engagement has improved, the geopolitical backdrop remains tense. Chinese President Xi cautioned during the Beijing discussions that mishandling sensitive
issues such as Taiwan could push bilateral relations into a “very dangerous place,” underscoring that strategic disagreements remain unresolved even as trade channels reopen.

From an economic standpoint, the IMF said easing tensions comes at a critical juncture for the global economy, which is already contending with multiple shocks.

Kozack noted that the Fund is closely monitoring the impact of elevated energy prices driven by instability in West Asia, including disruptions linked to Iran-related tensions and shipping risks in key maritime corridors. Brent crude has remained elevated in recent periods, adding to inflationary pressures across import-dependent economies.

According to the IMF’s latest scenario analysis, the global economy is gradually shifting towards a more adverse growth trajectory due to persistent external shocks. The Fund has previously outlined that sustained high oil prices—combined with tighter financial conditions and rising inflation expectations—could significantly weigh on global output.

Despite these risks, Kozack said medium-term inflation expectations remain anchored in most major economies, even if short-term price pressures have picked up due to energy volatility. She also noted that global financial conditions remain broadly accommodative, helping cushion downside risks for now.

The IMF has been tracking a widening gap between baseline growth assumptions and risk-adjusted scenarios. Under more benign conditions, global growth remains above 3 per cent, but under stress scenarios it could fall closer to the mid-2 per cent range, particularly if energy disruptions persist and geopolitical tensions escalate further.