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China is in no hurry to make 'monster compromises' to the US, expert says

Key Points
  • Several analysts have predicted that China's economy — not America's — will experience a bigger hit from tariffs in the trade war.
  • But the Chinese economy has been "pretty stable," which means Beijing is not in a hurry to make "monster compromises" to Washington, said Scott Kennedy of the Center for Strategic and International Studies.
  • The U.S. economy is also doing well, so both countries could "hunker down," said Kennedy.
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Don't see resolution in US-China trade tensions for quite some time: Expert

The Chinese economy is "pretty stable" currently — and that means Beijing is not in a hurry to make "monster compromises" to Washington in the trade war, said an expert from Center for Strategic and International Studies think tank.

Several analysts have predicted that China's economy — instead of America's — will experience a bigger hit from elevated tariffs. That's partly because the U.S. economy is on better footing and, over the longer term, China may have more to lose because of its greater reliance on exports.

But China has so far shown that it can withstand challenges posed by the trade war, said Scott Kennedy, senior advisor of the Freeman Chair in China Studies and director of the Project on Chinese Business and Political Economy at CSIS.

"China's economy is still pretty stable. They've got other trading partners, they've got domestic stimulus that they can use. So, they're able to weather the storm," Kennedy told CNBC's "Capital Connection" on Friday from the China Development Forum in Beijing.

He added that some of the problems in the Chinese economy, such as increasing levels of debt, were addressed before the trade war broke out last year — which contributed to the current stability in China.

"So, that economic situation that China's in right now is relatively good. It means they're in no hurry to make monster compromises to address American needs," he said. "Of course, looking at the U.S. economy, it's in a parallel type situation, which leaves both sides to hunker down."

Kennedy's comments came as an increasing number of analysts lower their expectations for a trade deal between the U.S. and China in the coming months.

The world's two largest economies have agreed to meet in Washington in early October for the next round of negotiations. Former U.S. Commerce Secretary Carlos Gutierrez said it's "a bit optimistic" to expect any breakthrough in those talks.