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US-China trade war takes center stage at Credit Suisse investment conference

The U.S.-China trade war was a recurring theme at this week's Credit Suisse China Investment Conference in Shenzhen. The topic provoked strong opinions, with former Vice Minister of Foreign Trade and Economic Cooperation of China Long Yongtu calling U.S. restrictions on Chinese companies such as Huawei Technologies Co. Ltd. "inhumane."

This is perhaps unsurprising given the broad impact of U.S. policy described by panelists. Tariffs and trade restrictions on Chinese products imposed by U.S. President Donald Trump have not only impacted imports and exports, they said. They have also made it harder for Chinese companies to source investment.

Off-balance sheet financing — such as operating leases and partnerships — in particular has been more difficult to secure due to the impact of U.S. policies, David Wang, head of China economics at Credit Suisse said. Small and mid-sized businesses suffer disproportionately as they are more likely to use these forms of financing, Wang said.

Access to credit more generally could become more difficult, particularly in China's manufacturing industry, which is being hit most by declining exports, Wang said.

China is heavily exposed to any disruptions in tech manufacturing and the global technology supply chain, Long said. The U.S. is one of the world's largest material and technology providers so trade restrictions would harm these sectors in China the most, Long said.

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Earlier, conference attendees heard China imports of semiconductor components have been impacted by the trade war, which is impacting consumer electronics production in the country.

The situation is unlikely to improve dramatically, panelists said. Lawrence Summers, former secretary of the U.S. Treasury and Harvard University professor, said the U.S. and China will manage a partial agreement that mellows trade uncertainties but will not eliminate them. They lack the trust to go further, Summers said.

Policies against China might be one of the few commonalities between Republicans and Democratic in the U.S., he said.

China and the U.S. have agreed to a partial deal orally, but it might take months or years to strike an effective, written one, Long said.

The U.S. and China have agreed to cancel tariffs on each other's goods in stages as the two countries continue their negotiations to secure a "phase one" trade deal, Chinese Ministry of Commerce Spokesman Gao Feng said Nov. 7.

Both parties have been involved in negotiations to iron out details of the partial deal to pause elements of their ongoing trade war. U.S. Commerce Secretary Wilbur Ross expressed confidence that Washington will sign the "phase one" pact with Beijing this month, though recent reports suggest that the potential signing could be postponed until December.