A top adviser to the Chinese government warned Wednesday that the ongoing trade war between the U.S. and Beijing could lead to a 'world recession' by damaging supply chains from other countries.
“If that continues, it will disrupt the world economy and also particularly interrupt the world value chain,” said Wang Huiyao, the founder of global think tank Center for China and Globalization and an official adviser to the China State Council, told News 18, the CNN channel for India. “It’s going to be very bad if this continues. We may have another world recession.”
Wang said many of the products made in China relied on supply chains countries like Japan, Korea, and India, so U.S. tariffs on its exports will impact exports from those countries. “If the U.S. levies tax on that, hitting China is one thing but will also hit the rest of the producers, raw material providers," Huiyao said.
China announced over the weekend it would reduce the reserves most commercial banks are required to hold by a single percentage point, which would free up nearly $175 billion to boost lending. The effort was widely seen as a reaction to strains on the economy caused by the tariffs on $250 billion worth of Chinese goods that the Trump administration hit with tariffs.