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Former US Treasury Secretary Hank Paulson on Tuesday said that he is hopeful that President Donald Trump’s planned travel to China next month for a summit will tamp down some of the long-standing tensions between the two nations because of how closely the world’s two largest economies are intertwined.
“We are in a period of what I would call mutually assured economic disruption,” Paulson, former CEO of Goldman Sachs, said at Semafor World Economy in Washington, DC. “That gives a sort of stability – a stability that doesn’t come out of mutual trust. It comes out of the fact that each knows that the cost of escalation is high.”
Paulson, who has been to China frequently, expects that the Chinese will do very well in welcoming Trump with all the ceremony and pomp that Trump loves. That could help ease some of the pressures and lead to more trust.
“There’s a big trust deficit right now – may even be bigger than the trade deficit,” Paulson said.
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China is the largest buyer of Iranian crude, and the blockade has a far-reaching effect on the Chinese economy.
On Tuesday, Xi made his strongest comments against the US-Israel war with Iran, saying: “We must not allow the world to revert to the law of the jungle,” according to the official Xinhua news agency.
That could be motivation for the US and China to resolve the Iran war that benefits both nations despite their rivalries, Paulson said.
“What this crisis really shows is we’re both linked to the global system through energy, financial stability, economic growth,” he said. “The world’s going to be a much more dangerous and less prosperous place unless our two countries can figure out ways to work together.”