Trump trade war: Morgan Stanley’s Ruchir Sharma says China much more vulnerable than United States

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Published: July 2, 2018 5:16:34 PM

Even as we continue to see major development around the trade war between China and the United States, Morgan Stanley’s Ruchir Sharma says that China appears to be much more vulnerable.

Ruchir Sharma, chief global strategist at Morgan Stanley said that China seems to be vulnerable due to to the restrictions imposed on technology.

Even as we continue to see major development around the trade war between China and the United States, Morgan Stanley’s Ruchir Sharma says that China appears to be much more vulnerable. In an interview to CNBC, Ruchir Sharma, chief global strategist at Morgan Stanley said that China seems to be vulnerable due to to the restrictions imposed on technology.

“So far we thought of de-globalisation in the sort of old sense, ie, barriers on trade, goods and services, and also possibly on immigration. But, the technology is what really determines the long term development of a nation. This is the most important aspect of the battle that is shaping up between the United States and China. This is where it’s hurting China,” Ruchir Sharma told the channel.

Notably, US President Donald Trump has ruled out backing down on import tariffs against China and threatened that the tariffs could go up to $500 billion worth of Chinese goods if the two countries are unable to strike a “fair” deal soon, PTI reported.  Further, the White House has already imposed 25 percent tariff on $50 billion worth of Chinese goods containing industrially significant technologies in an escalating tit-for-tat trade war between the world’s two largest economies.

“China is nervous that the US is now redirecting its focus towards the tech side. Many of the inputs, the chips, the software etc, is imported from the west from places such as the United States. So, China is vulnerable by anything that the Trump administration does,” Sharma noted.

According to the expert, China is definitely more vulnerable than the United States. Ruchir Sharma notes that while China is looking at the overall impact, the Trump administration’s decisions are partly based on Wall Street reactions. “The Wall Street started to get nervous about the entire imposition of trade restrictions, so the Trump administration backed off from imposing some of the harshest measures,” Sharma said adding that China has the willpower to fight this battle, but is definitely more vulnerable. “US on the other hand is much more sensitive about what happens in Wall Street reaction,” he said.

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