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Prominent Chinese economist says they'll be no US-China trade war — but plenty of conflicts

  • President Donald Trump has been a heavy critic of China's trade policy and reportedly told advisors in the Oval Office "I want tariffs," in a recent meeting
  • Fan Gang told CNBC that though China's debt is the main concern for the economy, it is a problem that it will be fixed in the coming years

The relationship between China and the U.S. has always been tense when it comes to trade and this is unlikely to change, a member of the monetary policy committee at the People's Bank of China told CNBC Friday.

"Look back 20 years ago, the relationship is always bumping. We always have the problem of trade issue," Fan Gang, chairman of the China Reform Foundation, said at the sidelines of the Ambrosetti Forum Friday.

Issues over trade have involved China's current account surplus, alleged currency manipulation and more recently, tariffs, he said. President Donald Trump has been a heavy critic of China's trade policy and reportedly told advisors in the Oval Office "I want tariffs," in a recent meeting. Fears over a potential trade war might have risen due to Trump's protectionist view, but, according to Fan Gang, both countries aren't likely to reach that stage.

"I don't think (there will be a trade war). There are going to be more trade conflicts but I don't believe there's going to be a war. Both countries are so close, so dependent on each other … In the last minute people will find ways to deal with (trade problems)," he told CNBC.

China's debt is not getting worse

Fan Gang, who is one of the most advocate supporters of reforms in China, told CNBC that though the country's debt is the main concern for the economy, it is a problem that it will be fixed in the coming years.

"Things aren't getting worse," he said about the country's debt pile. He believes that with growth and reform efforts the problem will be solved in two to three years.

The International Monetary Fund has repeatedly warned on the danger that Chinese debt poses to the global economy. It said in mid-August that there had been a jump in private sector debt and a growing use of complex financial instruments. It has been China's aim to double the size of the economy in the current decade even if that means higher debt levels. According to IMF figures, household debt is set to reach 46.3 percent of GDP (gross domestic product) this year and 48.7 percent of GDP in 2018.