CHINA CALLS FOR CONSTRUCTIVE SOLUTION
Dispute will also hurt major trading partners, says central bank
CHINA’S central bank governor Yi Gang said the nation is seeking to solve trade tensions with the United States constructively and will continue to open up its services industry, especially the finance sector.
The risks from the trade conflict are “significant”, hurting global growth and causing uncertainty in financial markets, Yi said at a Group of 30 international banking seminar held on the sidelines of the International Monetary Fund and World Bank’s meetings in Bali yesterday.
“The trade tensions have been a problem because it causes negative expectations, it creates uncertainties, so people are nervous.”
While China’s economy is still showing steady growth, with data likely to show expansion of 6.6 per cent in the third quarter, the tariff war has damped investor sentiment, driving the Chinese currency down more than nine per cent against the US dollar in the past six months and pushing the nation’s benchmark stock index into bear market.
Yi said the dispute will not only hurt China but also its major trading partners, and a constructive solution is better than a trade war. Nevertheless, China is preparing for a protracted conflict, he said.
He said China will “follow our principles” when negotiating with the US, responding to a question from Mexico’s ex-president Ernesto Zedillo on what the government has learned from the recent trade agreement between the US, Canada and Mexico.
Yi said China’s current account surplus has been narrowing over the years and will likely drop below one per cent of gross domestic product this year.
There are parts of trade between China and the US that are not being reflected in the data, such as US subsidiary companies that produce and sell in China, he said.
He reiterated that China will step up reforms and open up its economy further, while working to improve the protection of intellectual property rights.