China and America could be heading for a new cold war, Stephen Roach warns
Veteran economist says neither side has an exit strategy in trade dispute, and it could turn into ‘protracted, bitter battle’
As Beijing and Washington dig in their heels in the spiralling trade conflict – a symptom of the broader strategic conflict between the major powers – the world may see the onset of a new cold war, veteran American economist Stephen Roach warned on Friday.
The former chairman of Morgan Stanley Asia said the next round of tariffs US President Donald Trump has threatened to levy on US$200 billion of Chinese goods would be another significant escalation of the dispute, which could lead to a “protracted, bitter battle”.
“What does the US do if China’s not going to back down? It doesn’t have a plan B,” Roach said on the sidelines of the American Chamber of Commerce annual conference in Hong Kong.
“It could be a new cold war because the US is after containing the biggest threat that it faces as a global power, which is China,” said Roach, now a senior fellow at Yale University.
“China’s stymied on how to address the increasingly aggressive policies of the Trump administration … The outcome seems to be that right now, at this point, there is no exit strategy for either side.”
