BofAML warns about consequences of US-China tensions for global economy
Bank of America has warned that an escalation of trade tension between the US and China can turn into one of the major threats to the global economy in 2017.
In a report, Bank of America Merrill Lynch (BofAML) said the economic ties between the US and China are highly important for the world economy as the two sides have the most power to boost the global markets.
The bank also noted that the ties would be tested in the coming months after the US President-elect Donald Trump takes office.
“It remains to be seen whether the incoming US administration will name China a currency manipulator,” the BofAML report added.
Trump has repeatedly dismissed -during his presidential campaign- Chinese economic policies as unfair, pointing to what he called China’s currency manipulation, theft of trade secrets, hacking, lax labor and environmental regulations.
He has also accused China of taking American jobs and depressing wages, threatening to impose a tariff of up to 45 percent on Chinese imports. President-elect Trump established the White House National Trade Council, to be led by Peter Navarro, who’s a hard-line critic of China.
According to the report, China could potentially agree to make some small concessions.
“We could imagine China agreeing to tighten its environmental rules since it seems increasingly in their self-interest and they are already trying to prevent weakness in their currency, but other concessions could prove hard to come by,” said Ethan Harris, head of global economics at BofAML.
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