A ship unloading at the port in Qingdao, in China's eastern Shandong province. Image Credit: AFP

Beijing: The US escalation of trade tensions won’t solve any of its problems but will create volatility in global markets and hurt the world economy, China’s top financial regulator said Saturday.

Higher US tariffs will have a “very limited” impact on China’s economy while hurting the US about as much, said Xiao Yuanqi, spokesman for the China Banking and Regulatory Commission, reading a speech written by CBIRC Chairman Guo Shuqing.

Many of China’s exports can be redirected to the domestic market as the nation shifts to a more consumption-driven economy, Xiao said at a forum in Beijing. China will also find new export markets while continuing to ship many products to the US, as importers will be willing to share the tariff costs and some Chinese products prove difficult to replace, he said.

The world’s second-largest economy faces severe disruption from US President Donald Trump’s planned increases in tariffs on its goods, and the associated uncertainty that the worsening trade war brings. The People’s Bank of China has warned that trade tensions with the US could destabilise the global economy.

Xiao said China still has ample scope for more foreign capital in its financial sector, noting that it represents only 2 per cent of the nation’s equity markets and 2.9 per cent of its bond market, while by assets foreign banks and insurers represent 1.6 per cent and 5.8 per cent of their industries, respectively.

“We especially welcome companies with good market reputation and risk management practices that have expertise in wealth management, credit ratings, consumer finance, retirement and health insurance to enter China’s market,” Xiao said. He warned that speculators shorting the yuan would suffer large losses.