US runs risk of backfire with trade war tariffs, Chinese banking chief warns

Just days before the heads of the world’s two biggest economies are expected to meet, China’s top financial regulator has played down the impact of US tariffs on the Chinese economy, saying it was “very limited” and could even backfire on the United States.

Guo Shuqing, chairman of the China Banking Regulatory Commission, the country’s banking watchdog, said on Friday that the United States would “pay a huge price” for the ongoing trade conflict, including losses in exports China, costs to consumers and importers, lost income for hi-tech firms, and damage to the US dollar-led global financial system.

“The US can no doubt increase tariffs on us to the extreme, but this will have very limited impact on the Chinese economy,” he wrote in a commentary in Communist Party mouthpiece People’s Daily. “By contrast, the US itself will be hit to almost the same degree.”

“The goal for the US in raising tariffs is to decrease the trade imbalance between China and the US, but because of Chinese countermeasures, the direct result has become uncertain and the [US action] could ... even backfire.”

The comments from Guo, who is also the central bank’s top party official, come one week before the presidents of China and the US – Xi Jinping and Donald Trump – are set to meet on the sidelines of the Group of 20 summit in Japan. It will be the first time the two leaders have met since both sides imposed fresh tariffs in their trade war as talks to resolve the conflict came to a halt.

Trump claimed earlier that the Chinese side had backtracked on core commitments in trade negotiations – including intellectual property protection and reciprocal market access – while Beijing insisted that the talks stalled over constant changes in US demands.