‘Trade war with US could slice 1% off China’s GDP’

A high-ranking Chinese official has said the ongoing trade war with the US could slash China’s GDP by one per cent, in the first such admission by Beijing that the tariff war with Washington is biting the world’s second largest economy.

The Chinese economy which is on a downward trend slowed to 6.8 per cent last year and the government this year officially slashed the GDP growth forecast to be between 6.5 and 6 per cent.

US President Donald Trump, who kicked off the trade war last year, is demanding China to reduce the massive trade deficit which has climbed to over $539 billion last year. He is also insisting on Beijing for verifiable measures for protection of intellectual property rights (IPR), technology transfer and more access to American goods to Chinese markets.

The US-China trade war could slash one percentage point off Beijing’s economic growth this year, Wang Yang, one of the seven members of the elite Politburo Standing Committee of the Communist Party of China (CPC), was quoted as saying by the Hong Kong-based South China Morning Post .

Speaking to a group of Taiwanese business people whose companies are based in mainland China, Wang said the government had assessed the impact of the near year-long dispute and estimated that in the worst-case scenario gross domestic product growth would be one percentage point lower than expected.

While Wang did not outline any plans for dealing with the fallout from the trade war, he is the first official from the top policymaking body to speak so candidly about its possible impact on headline targets, the report said.

So far the two countries slapped billions worth of tariffs on each other’s exports. Trump had threatened to slap tariffs on the remaining Chinese exports. He has also been asserting that China is at a disadvantage as its economy was not so good and the tariff war would hurt Beijing badly.

‘Show sincerity’

According to a Reuters report, China has said that the US must show sincerity if it is to hold meaningful trade talks.

China has yet to say whether or how it will retaliate against the latest escalation in trade tension, although the state media has taken an increasingly strident tone, with the ruling Communist Party's People's Daily publishing a front-page commentary that evoked the patriotic spirit of past wars.

China’s currency slid to its weakest in almost five months, although losses were capped after sources that the central bank would ensure the yuan did not weaken past the key 7-per-dollar level in the immediate term.

Foreign Ministry spokesman Lu Kang, asked about state media reports suggesting there would be no more US-China trade talks, said China always encouraged resolving disputes between the two countries with dialogue and consultations.

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