Chinese top official says GDP may dip by 1% if trade war with US continues

The official however stated that the economy would overcome any obstacle and will not require any major structural change

A high ranking Chinese official has said that the ongoing trade war with the US could slash China's GDP by one per cent, in the first such admission by Beijing that the tariff war with Washington is biting the world's second largest economy.

The Chinese economy which is on a downward trend slowed down to 6.8 per cent last year and the government this year officially slashed the GDP growth to be between 6.5 and six per cent.

US President Donald Trump, who kicked off the trade war last year, is demanding China to reduce the massive trade deficit which has climbed to over USD 539 billion last year. He is also insisting on Beijing for verifiable measures for protection of intellectual property rights (IPR), technology transfer and more access to American goods to Chinese markets.

The US-China trade war could slash one percentage point off Beijing's economic growth this year, Wang Yang, one of the seven members of the elite Politburo Standing Committee of the Communist Party of China (CPC) which virtually rules the country, was quoted as saying by the Hong Kong-based South China Morning Post.

Speaking to a group of Taiwanese business people whose companies are based in mainland China on Thursday, Wang said the government had assessed the impact of the near year-long dispute and estimated that in the worst-case scenario gross domestic product growth would be one percentage point lower than expected.

While Wang did not outline any plans for dealing with the fallout from the trade war, he is the first official from the top policymaking body to speak so candidly about its possible impact on headline targets, the report said.

A member of the audience at the event in Beijing said despite the official's frank assessment, he did not seem too worried about the long-term effects of China's spat with the US.

"Wang said that although the trade war would have an impact on the mainland's economic development, and had caused significant waves it would not lead to any structural changes," the unnamed delegate was quoted as saying.

China and US had 11 rounds of talks headed by trade officials of both the countries to work out a trade deal.

So far the two countries slapped billions worth of tariffs on each other's exports.

Trump had threatened to slap tariffs on the remaining Chinese exports.

He has also been asserting that China is at a disadvantage as its economy was not so good and the tariff war would hurt Beijing badly.

The Chinese Foreign Ministry on Wednesday said Trump's remarks were baseless.

"The fact is, the Chinese economy is growing steadily with a positive momentum. Trade protectionist measures of the US side will have some impact on our economy, but we can totally overcome it. We have the confidence and capability to guard against any external risks and impacts," Chinese Foreign Ministry spokesman Geng Shuang had told a media briefing.