FILE PHOTO: A Benjamin Franklin U.S. 100 dollar banknote and a Chinese 100 yuan banknote with late Chinese Chairman Mao Zedong are seen in this picture illustration in Beijing, China, January 21, 2016. REUTERS/Jason Lee/File Photo
BEIJING (Reuters) – A Sino-U.S. trade war could ease somewhat but wider conflicts between the world’s two largest economies will continue, Lou Jiwei, a former Chinese finance minister, said on Saturday.
“Look at the next development, there could be compromises in the trade war at a certain stage, and we have seen signs of compromising,” Lou, now an official with a body that advises China’s parliament, told an economic forum in Beijing.
Officials from both countries on Thursday said China and the United States had agreed to roll back tariffs already put in place on each others’ goods if a “phase one” deal was concluded, but the idea has been met with opposition from some quarters of the administration U.S. President Donald Trump.
Trump himself, in comments that hit stock prices and the dollar, said on Friday he had not agreed to a tariff rollback.
Washington has adopted a strategy to contain China’s economic rise by preventing the country from climbing up the global value chain, Lou said.
“Containment and counter-containment are inevitable and that will be a long-term issue,” he said.
But Lou also said it would be difficult for the United States to decouple from China, given the potential disruption to global supply chains and the impact on businesses.
The U.S. tariffs on Chinese exports will not fundamentally resolve its trade deficit, which is caused by the high U.S. government debt ratio and a low household savings rate, he said.
China should open up its economy wider to foreign investors, but it should not rush to relax its capital controls, Lou said.
Reporting by Kevin Yao; Editing by Tom Hogue