Exclusive | Asian Development Bank chimes in with dire prediction for China’s 2019 economic growth if trade war deteriorates to worst-case scenario
- ADB sees China growth of 6.3 per cent this year under existing sanctions, 5.3 per cent if US sanctions all Chinese exports
The outcome of the ongoing US-China trade war will be critical to how China’s economy and those of other Asian nations perform this year, the Asian Development Bank’s president said.
If relations were to deteriorate and the trade dispute were to escalate into a full-blown war, “the immediate impact would be particularly hard on China” and that “other economies in developing Asia would initially feel the pinch as production slowed across global value chains,” Takehiko Nakao said in an interview with the South China Morning Post in Tokyo.
US tariffs that have already been imposed could crimp China’s economic growth rate by 0.5 percentage point in 2019, worsening to a full percentage point if all bilateral trade were to be taxed at a higher tariff rate, said the former Japanese vice finance minister.
The worst-case scenario could slow China’s economic growth to 5.3 per cent, making it the slowest annual increment since quarterly data began to be reported in 1992.
The dire forecast underscores the stakes as Chinese and US negotiators wrapped up talks this week aimed at resolving the outstanding issues in the trade war between the world’s two largest economies. Both sides ended their three-day talks in Beijing with the agreement to create a framework to verify China’s commitment to structural industrial reforms.