MNI: Trade War With U.S. May Cost China 0.8 Pp Growth: CF40

     BEIJING (MNI) - The trade conflict between the two largest economies, in

its worst possible outcome, may slow China's growth by as much 0.8 percentage

point, an economist with a leading Chinese think tank said.

     Should the two nations deepen the spat, engage in a tit-for-tat strategy

and apply punitive tariffs against each other's exports, the worst case of

scenario may be that China's trade surplus against the U.S. dropping $100

billion, Ha Jiming, a senior fellow at the China Finance 40 Forum and former

chief economist of China International Capital Corporation Limited (CICC), said

at a conference on Saturday.

     Citing his three-scenario analysis, Ha said the worst outcome is that the

escalating tensions result in U.S. slapping heavy tariffs targeting China's

labor-intensive industries, such as machinery and equipment, as well as consumer

goods such as toys and shoes, which employ a significant portion of the

population. It may also step up restrictions over high-tech exports to China.

     However, in a more moderate scenario where the U.S. applies 25% tariffs on

$50 billion worth of products targeting the high-tech industry promoted by "Made

in China 2025" campaign, the impact on China is insignificant, only 0.1

percentage point of China's short-term GDP growth, Ha said.

     Ha also said he expects more "concrete outcomes" as Vice Premier Liu He

visits Washington this week to further talks initiated from a visit by the U.S.

delegation earlier this month.

     In a better case scenario, China may boost imports from the U.S. while

investing in the lower ends of U.S. manufacturing, which in turn boosts demand

for Chinese goods, said Ha, who spoke at a forum in Beijing with the Peterson

Institute For International Economics.

     However, Ha's U.S. counterparts sounded less optimistic, at least in the

short-term. "Whenever you are dealing with a very powerful and opinionated

individual like President Trump, the result of an individual meeting are not

entirely predictable," said PIIE President Adam Posen.

     The list of demands presented by the U.S. "did not give us great reason for

optimism," said PIIE follow Mary Lovely, adding time is needed for the Congress

to better decide on the bilateral trade development.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

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