China trade guru Dr Jianping Zhang warns extreme tariffs levied by the United States could cause an "artificial economic earthquake in the global market".
"If you look at the IMF prediction that maybe we are facing this possible economic recession – that is the so-called Trump recession – thatcould be a terrible economic recession or slowdown. So, basically, we hope that all of those Apec members can work together on global supply chains, and regional cooperation in order to prevent the path of a recession.
"Of course with China and the US we hope we may go back to negotiation instead of fighting each other and then we can promote our common development interest."
Zhang, who is director of the Chinese Commerce Ministry's research centre, was one of six leading international experts who spoke on 'Disruptions and Disruptors to international trade' at the inaugural Auckland Trade and Economic Policy School. He is a frequent commentator on China's CGTN television channel and at international think tank forums.
He stresses it's not just China that has faced the threat of punishing US tariffs as the Trump Administration bludgeons favourable trade deals including with Japan which is now facing punitive auto tariffs.
"He is using that tariff stick, and everywhere, not only for China, but also for the EU, for Japan, Canada and Mexico," says Zhang.
Top Chinese and US negotiators are due to meet in Washington early next month to resume negotiations on a draft text. The South China Morning Post reported this week that China is expected to agree to buy more American agricultural products to sweeten a deal but it wants a delay in US tariffs and the easing of a supply ban against Chinese telecommunications giant Huawei.
"From the Chinese side our viewpoint is there will be no winner for this trade war," Zhang told the Herald.
"Both sides need to have agreement. You have to consider the national interest, your economic interest, your business interest, from the US side and from the Chinese side."
Zhang contends that any breakthrough comes down to timing. "My view point is that Trump just likes to play this game in order to get political support. That's very dangerous to play off that."
He suggested that if the trade war bites hard on the US domestic economy as next year's US presidential elections near, President Trump may become more conciliatory.
In his forum address - China, the WTO and the future of Asia-Pacific trade - Zhang emphasised it was important that the US side showed the Chinese side some respect if negotiations were to succeed.
Trump (left) and Chinese President Xi Jinping. Photo / AP
He later said the negotiations needed to result in a fair agreement warning that the Chinese people would not accept an unfair deal.
Zhang pointed to three possible scenarios:
First, that the two sides decided to have a serious negotiation and in the short term, maybe by the end of this year or by the first quarter next year, an agreement may be produced that satisfies both sides. "That would be the better situation."
"The neutral scenario means two sides are moving forward to negotiate but the result is not satisfactory," Zhang adds. "This type of scenario will last maybe for a little bit."
The worse scenario is that negotiations break down again and the two sides mete out tariff punishment continually and the trade war worsens.
"China's economy can tolerate this type of trade friction," Zhang says. "This year we can find that China's market becomes more confident."
Last year he predicted that China's 2019 growth rate would be 6.2 per cent but has recently increased that forecast to 6.3 per cent.
"I think that China's macro-economic policy - especially monetary policy and fiscal policy - can play a role because we have enough space to make adjustment.
"Meanwhile, China's economy is more relying on the domestic market instead of international trade so that means this year China's economy could be maintained and remain stable. That's my viewpoints."
