It’s a trade war, not a finance war, Chinese economists argue at ‘Asian Davos’
Beijing unlikely to up the ante and resort to broader retaliation in its trade spat with the United States, observers say
Economic insiders at the “Asian Davos” have urged leaders of the world’s two biggest economies to keep a cool head and resist opening up monetary and financial fronts in a trade war.
Rising trade tensions between China and the United States have prompted speculation about how Beijing would respond to Washington’s threatened tariffs on a combined US$150 billion in Chinese goods. Possible retaliation ranges from a sell-off of US Treasuries to a devaluation of the Chinese currency.
But Li Yang, a senior economic adviser to the Chinese leadership and the head of the National Institute for Finance and Development, an official think tank, told the Boao Forum for Asia on Monday that China was unlikely to use financial means to tackle its trade disputes partly because Beijing had more tolerance for trade losses.
Li said China was in good shape to withstand hits from US President Donald Trump’s trade actions because net exports played only a marginal role in China’s overall economy compared to domestic consumption and investment.
A trade war “would not carry a significant blow” to China, he said.