Market Insider

Trump's trade policies could make things much worse for debt-ridden China

China obviously wants to strengthen its global position: Generali CEO

If trade frictions increase between the U.S. and China that could have significant fallout for China as it struggles with debt, and weigh on the global economy.

President-elect Donald Trump has threatened to take a tougher stance — including imposing tariffs and labeling China a currency manipulator.

Meanwhile, with China's Communist Party congress set to meet this fall, the country's "leadership cannot afford to be perceived as weak," said David Cui, head of China equity strategy at Bank of America Merrill Lynch.

"That's why the market has grossly underestimated trade frictions," Cui said, speaking on a call with reporters late Tuesday.