Trade tensions have had a ‘significant’ impact on China, IMF says



Evelyn Cheng | CNBC

Heightened trade tensions with the U.S. are beginning to hit China’s growth.

The International Monetary Fund (IMF) lowered its 2019 growth forecast for the world’s second-largest economy to 6.2% from 6.3% on Wednesday, after the conclusion of the organization’s visit to China over roughly the last two weeks.

“The trade tensions have had an impact, significant, but in our view, so far contained,” Kenneth Kang, deputy director of the Asia-Pacific Department at the IMF and leader of the visiting team, told CNBC in an interview Wednesday.

“The renewed trade tensions are a significant source of uncertainty and a downside risk to our outlook … But I think we need to wait a few more months,” he said.

The IMF expects China’s growth to slow to 6% next year, and to 5.5% by 2024.

Negotiations between Beijing and President Donald Trump’s administration took a turn for the worse in early May with the increase of tariffs on $200 billion worth of Chinese goods exported to the U.S., and an effective ban on American companies doing business with Chinese telecom giant Huawei. Beijing responded with tariffs on $60 billion worth of U.S. goods, the announcement of an “unreliable entities list” and a far tougher stance against U.S. requests.

U.S. Treasury Secretary Steven Mnuchin and People’s Bank of China Governor Yi Gang are expected to meet this weekend, but there is still no confirmation on whether Trump and Chinese President Xi Jinping will hold talks at the G-20 meeting in Japan at the end of the month to seal even a temporary deal.


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