Trade tensions will rattle the global economy significantly and countries must work together towards a constructive solution, urged China's central bank governor Yi Gang, who said his country is sincerely looking to resolve tensions with the US.
His call came a day after US Treasury Secretary Steve Mnuchin dismissed fears that the US-China trade row would threaten the world economy, insisting that Washington's moves were a bid to push for a "more balanced trading relationship" with Beijing to the benefit of all.
But Mr Yi on Sunday (Oct 14) stressed that the trade dispute would lead to a lose-lose situation, pointing out that representatives from over a dozen countries he met with in Bali over the past week had all reported that their economies had felt the negative impact.
The International Monetary Fund (IMF) this week slashed global growth forecasts to 3.7 per cent in light of rising trade tensions.
Mr Yi agreed with this revision, saying at the G30 International Banking Seminar that trade tensions have created negative expectations and uncertainties, unsettling markets.
"(China is) sincere in showing that we are willing to have a constructive solution," he said. "We have to realise the significant negative impact of trade tensions, and the whole world should work together to seek a constructive solution."
The US has been vocal about its goods trade deficit with China, but Mr Yi pointed out on Sunday that the US has a hefty US$40 billion per year services trade surplus with his country.
This surplus, said Mr Yi, has grown at about 20 per cent a year.
China, he added, will press on with opening up its services industry, especially the finance sector.
He said: "We think that the rules-based multilateral system is working. We think that globalisation is working, that competitive advantage and free trade is working. So we are going to follow that principle."
"But we are also preparing for the worst," added Mr Yi, noting that many people in China are bracing themselves for the possibility of a prolonged trade war.
The annual seminar - which was hosted by Singapore's Deputy Prime Minister Tharman Shanmugaratnam, who is G30 chair - saw finance chiefs from around the world discussing issues such as the world economy and inclusive growth.
The shadow of recent trade disputes and rising protecionism hung over the session.
Mr Francoise Villeroy de Galhau, governor of France's central bank noted that the indirect effects of protectionism - such as diminishing business confidence - are often underestimated.
The repercussions of trade tensions should be taken seriously, speakers agreed.
Bank of Japan governor Haruhiko Kuroda said: "It's essential to continue international dialogue with a renewed recognition of free trade."
