January 10, 2017 | 14:00 | Dubai
Bank of America Merrill Lynch’s Global Economic Weekly highlights the biggest risk to the global economy in 2017 being a serious escalation of US-China trade tensions.
- Merrill Lynch expects China to be declared a “currency manipulator” and for specific cases to be brought against China.
- US-China is arguably the most important bilateral relationship in the global economy, given they are the two biggest countries in terms of trade and GDP; the most important source of FX reserves and the biggest holder of reserves; and hence the two countries with the most power to move the global markets and economy.
- This relationship will be tested in the coming months, as relations with China are a centerpiece of president-elect Trump’s agenda.
- “We could imagine China agreeing to tighten its environmental rules since it seems increasingly in their self-interest and they are already trying to prevent weakness in their currency, but other concessions could prove hard to come by.” – Ethan S. Harris, Global Economist, Bank of America Merrill Lynch .