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Repeats Story Initially Transmitted at 05:34 GMT Sep 21/01:34 EST Sep 21
--Steering Clear Of Financial Weapons, Could Target Supply Chain: Advisor
BEIJING (MNI) - China is unlikely to use its currency or its stockpile of
U.S. financial assets as weapons in retaliation against U.S. tariffs as the
trade war escalates, but it may restrict exports of certain supply chain
components, an advisor to the authorities told MNI in an interview.
There is little room for China to use its currency as a weapon or to dump
U.S Treasuries, Zhu Ning, professor at the People's Bank of China School of
"As the U.S has warned it would mark China as a forex manipulator and there
are no other assets, big and stable enough, for China's large pile of forex
reserves, the two options have slim chances (of being enacted)," Zhu said.
However, he did predict the yuan will remain weak in the long run.
Zhu did, however, target one area where China could perhaps retaliate
against the U.S. as the dispute escalates; stopping the export of manufacturing
components, disrupting U.S. company supply chains.
"A large amount of components, including those for mobile phones and
aircrafts, are made in China, so it is an option for a future reaction against
fresh tariffs," Zhu said.
"But the move will also hurt China's economy, particularly if it made
international companies relocate businesses out of the country to avoid risks,"
"It is concerning that unemployment would increase since export-led
manufacturing is still labor intensive," Zhu noted.
And Zhu noted the particular risks for China as it is at a stage of
economic slowdown, while the U.S economy is showing upward momentum.
--MNI London Bureau; tel: +44 203-586-2225; email: email@example.com