ExclusiveUS-China trade tensions to deepen in 2019, hitting Chinese economy: Moody’s
- Chief ratings official predicts US tariffs will rise to 25 per cent on January 1 as scheduled
- Tensions are no longer restricted to trade and Beijing will be tested with more policy complexity ahead
Beijing will be tested with more policy complexity in 2019 as tensions with Washington are set to go beyond trade issues and put further downward pressure on China’s economy, a senior executive of Moody’s said.
“Trade tensions are going to deepen. Those 25 per cent tariffs [on US$200 billion worth of Chinese merchandise] will be implemented,” Michael Taylor, the company’s chief ratings officer for the Asia-Pacific region, said in an interview on Monday.
The warning by the international ratings agency – which downgraded China’s sovereign credit by one notch in May 2017 due to concerns over high debt levels – comes amid hopes of some progress on resolving the trade conflict when US President Donald Trump and Chinese President Xi Jinping meet after the G20 summit in Argentina.
Some analysts believe the two leaders could agree to a “ceasefire” in the trade dispute, with the planned increase in tariffs – from 10 per cent to 25 per cent – scheduled for January 1 put on hold.
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Taylor, who has a long career in crisis management at the International Monetary Fund and several central banks, said bilateral tensions would be difficult to resolve with no “quick or easy solutions”.