With a former Chinese central bank chief saying that further escalation in trade tensions between Washington and Beijing could greatly hurt the global economy, China continued to ramp up the rhetoric against the U.S. on Friday.
Dai Xianglong, a former governor of the People’s Bank of China, said Friday morning at a press event in Beijing hosted by think tank China Center for International Economic Exchanges, that the consequence of the China-U.S. trade war not only will be reflected in both countries, but will also extend to relevant regions, and extend to the whole world.
He further says that If the China-U.S. trade war continues to grow larger, it may cause the global economy to decline, and may cause a global financial crisis.
In response to President Donald Trump’s decision to raise duties on $200 billion in Chinese products to 25% from 10%, China’s tariffs on $60 billion worth of U.S. goods are set to take effect Saturday, June 1.
The trade dispute between the world’s two largest economies has roiled global markets for months with worries about the negative impact on growth. The S&P 500fell more than 5% — on track for its first negative month since December, as negotiations took a turn for the worse this month.
After breaking above the psychologically key 3,000 level earlier this year, the Shanghai composite has struggled to climb, hovering near 2,900.
According to Dai, who was PBOC governor from 1995 to 2002, said Friday that he expects the Shanghai composite will rise steadily above the 3,000 level, helped by China’s coming market reforms. On Friday afternoon, the index traded mildly lower, near 2,898.
While noting that Beijing would not devalue the currency in response, the former central bank chief also attributed recent weakness in the yuan to the market’s reaction to trade tensions. He said that fundamentals, such as economic growth and foreign exchange reserves, support a stable yuan.
Trade tensions could last 30 years or more, predicts We, especially since he expects the U.S. will keep on with its investigations — even if a deal is reached in the near term.
He is confident that time, reason and truth are on their side he said. He further goes on to say that Chinese people will most certainly win, peace will most certainly win.