People’s Bank of China (PBoC) warned that uncertainty caused by friction and trade tensions between the United States (US) and China could have a negative impact on the global economy. According to the PBoC, in the future, trade friction and policy uncertainty could further drag the global economy through high inflation, damage to family and corporate sentiments, and financial market volatility.
The Chinese economy has some deep problems because some traditional sectors are in adjustment, manufacturing growth and private investment are slowing and economic growth is heavily dependent on property and infrastructure investment, the central bank said in the report.
In addition, uncertainties and impacts on the global supply chain caused by trade friction are gradually releasing, starting from postponed corporate investment decisions to easing external demand for some countries because the supply chain is disrupted.
The potential for disruption is considered to be severe because of a blow to rising tariffs on goods sold to the US, and related uncertainties caused by the worsening trade war. However, the PBoC estimates that China’s economic outlook will remain stable thanks to many favourable factors.
