GLOBAL rating agencies Moody’s Investors Service and Fitch Ratings said yesterday the proposed U.S. tariffs will have limited direct impact on China’s economy and a negotiated solution is most probable.

Chinese President Xi Jinping had pledged Tuesday to open the economy further and lower tariffs on products including cars in a speech at the Boao Forum amid rising trade tensions between the top two economies.

Moody’s said it expects the United States and China will prevent a significant escalation in their trade dispute going by the negative impact the restrictions will have on both economies.

“Trade has made a smaller contribution to China’s GDP growth in recent years and, combined with a changing trade structure, China’s direct vulnerability to potential trade shocks has declined,” Moody’s said in a report.

Last week, Washington threatened China with tariffs on US$50 billion in Chinese goods aimed at making China address what the United States calls infringement on U.S. intellectual property and forced technology transfers from its companies.

“The currently implemented U.S. trade measures will impact only a relatively small portion of Chinese exports to the United States, and we expect them to have a direct but contained effect on China’s economy,” Moody’s said.

Fitch said a full-blown trade war between the countries can create risks for corporations in the Asia-Pacific region, Fitch said.

U.S. President Donald Trump has been critical of China’s trade policies, criticizing China on Monday for maintaining 25-percent auto import tariffs compared to the United States’ 2.5-percent duties, calling such a relationship with China not free trade but “stupid trade.”

(SD-Agencies)