Director of the US National Economic Council, Larry Kudlow.
Director of the US National Economic Council, Larry Kudlow.

The Trump administration’s top economic adviser pushed back on speculation that the president is ready to soften his stance on China, saying that the US is operating from a position of “economic strength.”

“The USA is growing rapidly. The tax cuts, the deregulation rollback, the trade reform … we are growing. The Atlanta Federal Reserve is suggesting we may get near 5% growth in the second quarter,” Larry Kudlow, the director of the National Economic Council, said in a televised interview on Wednesday.

“That gives us the strength. China’s economy is not doing well. They are slowing down by many, many measures. Half of that economy is state-run enterprises that are losing money daily. Half of that economy is being financed by state-run banks who are issuing a couple of trillion dollars of non-performing loans. That’s a business and economic model which is not durable,” said Kudlow, who is seen as one of the trade doves in the White House and has advocated for a softer approach on trade.

“I believe China is operating from a greater position of weakness than folks think, and we are operating from a greater position of economic strength.”

The comments come ahead of a deadline of July 6 for a first round of tariffs on US$35 billion worth of intellectual-property-intensive Chinese goods to take effect. President Donald Trump has threatened that tariffs on a total of $250 billion in Chinese goods are on the table, should Beijing refuse to offer more than what it already has, which amounts to long-term contracts for US energy and agricultural goods.

The Trump administration has indicated that non-tariff barriers to investment in China, including pressure to transfer technology to local Chinese partners, along with industrial policies that grant subsidies to high-tech industries, are obstacles that need to be addressed.

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