Growing global tension could lead to much worse “trade war”

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A woman wearing a protective mask in France. The country is slowly reopening after almost two months of strict foreclosure.

Pascal Le Segretain | Getty Images

Escalating tensions over China’s handling of the coronavirus pandemic could be a “major risk” to economic recovery – and could even lead to a worse trade war than the one between Beijing and Washington, an investor told CNBC .

From America to Europe to Australia, more and more world leaders are calling for China to investigate the origins of the epidemic, which was first reported in the Chinese city of Wuhan end December.

As economies prepare to reopen after weeks of foreclosure to stem the spread of the virus, the recovery could be undermined by political tensions, said David Sokulsky, CEO and chief investment officer of the Concentrated Leaders Fund.

“This is a major risk which has not been taken into account for the moment,” he told CNBC on Thursday “Capital Connection”.

“As we get past the peaks of infection, politicians are going to want to blame someone, and the obvious target of that blame is China,” he added.

Blame game

The global economy nearly came to a halt in March, as countries closed their borders and businesses were closed in order to prevent the spread of the disease. To date, the disease has infected 4.4 million people and killed more than 302,000 people in more than 180 countries and territories.

Some countries have accused China of mismanaging the virus epidemic and are demanding compensation for the crippling impact on their economies. Others are calling for an investigation and want to know if China could have prevented the epidemic from spreading so widely.

But Beijing has repeatedly rejected claims that it mismanaged the situation.

“China is a victim, not an accomplice,” said Chinese Deputy Minister Le Yucheng, according to an official transcript of his interview with NBC News. “This is not the time for accusations and political manipulation,” he added.

The United States has threatened retaliation against Beijing, while European Commission President Ursula von der Leyen has supported calls for an investigation into the cause of the disease.

“If you look at the rebound in (fourth quarter) last year and in January this year, this is largely due to the improvement in trade negotiations and the signing of (the) first phase between United States and China, “said Sokulsky. .

We have seen a very rapid resumption of the trade wars we have had, but potentially on a much worse scale than last year.

David Sokulsky

CEO of Concentrated Leaders Fund

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