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U.S., China ties to remain contentious, to affect Asia: Moody's

All News 16:14 December 03, 2018

SEOUL, Dec. 3 (Yonhap) -- The pause in the Sino-American trade dispute may help to lower tensions, but their relations will remain contentious and will likely affect key Asian nations including South Korea, a global ratings agency said Monday.

On Saturday, U.S. President Donald Trump and Chinese President Xi Jinping held bilateral talks and agreed upon several measures to de-escalate trade frictions, including the U.S. cancellation of a planned tariff hike starting next year in return for China's pledge to purchase more American-made goods.

"Narrow agreements and modest concessions in their ongoing trade dispute will not bridge the wide gulf between their respective economic, political and strategic interests," said Marie Diron, managing director of the Sovereign Risk Group at Moody's Investors Service.

U.S., China ties to remain contentious, to affect Asia: Moody's - 1

Noting that the two giants are "too strong to cede their respective national interests in negotiations with each other," while the continuation of such an economic cold war would be costly for both, the analyst said Washington-Beijing relations "will swing between conflict and compromise."

Due to the deep integration in terms of technology and trade, major Asian economies, such as Hong Kong, South Korea and Singapore, are "most exposed to significant and lasting disruptions to trade and investment," according to Moody's.

"Continued tensions would disrupt global trade, erode the effectiveness of the multilateral international trade regime and dampen growth," the expert said, warning the impact will be felt "at the global, country, sector, and company level."


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