Trade war tariffs imposed by the US and China have started to affect corporate businesses of all sizes in a big way. Dr Vikram Mansharamani, an economist, Harvard lecturer and the author of Boombustology, said that the trade war is a "great power rivalry" and the UAE, at some point, may have to consider which side to choose.
"If the UAE is asked to choose between an American ecosystem and a Chinese ecosystem, that's a hard choice to think about," Mansharamani said at the 12th annual Arab Strategy Forum (ASF), held at Dubai International Financial centre.
"The Belt and Road initiative is part of that [rivalry]. This is about building an alternative economy; instead of going west towards the United States, they are going east towards central Asia, here, into the Middle East, into Africa, then to Europe," he said at ASF, a global open platform for the exchange of ideas and visions among elite thinkers, experts and prospective global leaders.
Mansharamani said the trade war could even end up in the formation of two global economies.
"It's a re-orientation of the world. [The Chinese] are building their institutions to go with it, so they have the Asian Infrastructure Investment Bank. The result of the trade war is that global supply chains are shifting right now. Big corporates cannot have supply risks in China, so global corporates are looking for a separate base somewhere else. The result is two global economies," he said.
China's exports fell in Novemeber as shipments to the US slowed sharply, adding to concerns about the effects of the trade war between both the countries. November exports from the world's second largest economy fell 1.1 percent since a year earlier, the fourth straight fall.
Exports to the US were down 23 percent, the worst such result since February and the twelfth monthly decline in a row.
"One has to pay attention to the Chinese economy. ... it is slowing down and facing many risks. Also, they have more bad debts. There are many signs indicating that the Chinese debt situation can put an overhang on the economy in the years to come," Mansharamani said.
(Writing by Seban Scaria email@example.com, editing by Daniel Luiz)
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