The trade war is already dragging down China’s economic growth and could end up costing it another $2.5 trillion of lost potential GDP if the battle with the US intensifies further, credit ratings agency Standard and Poor’s has warned.
After years of growth at above 6pc per year, S&P anticipates a sharp slowdown to 4.6pc per year over the next decade.
But if relations worsen further with more hikes to tariffs and other trade controls, the reality could be far worse.
“A sustained escalation could see growth fall to 3.7pc, implying an economy that is 10pc, or almost US$2.5 trillion, smaller than the base case by 2030,” said S&P.
However if Beijing “reaches an understanding with the US”, the slowdown could be much more limited with growth of 5.4pc on average up to 2030.
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