- The US and China are on a collision course that threatens the world economy, Nouriel Roubini warned.
- The “Dr. Doom” economist pointed to growing tensions between the US and China.
- “If they fail to achieve a new understanding on the issues driving their current confrontation, they will eventually collide.”
US-China tensions are headed down a dangerous path, and a collision between the two countries would destroy the world economy, according to top economist Nouriel Roubini.
The “Dr. Doom” economist, who is notorious for his bombastic prognostications on Wall Street, warned that both nations are in a cold war that could turn hot.
“If they fail to achieve a new understanding on issues driving their current confrontation, they will eventually collide,” Roubini said in an op-ed for Project Syndicate on Wednesday. “That would lead inexorably to a military confrontation that would destroy the world economy, and which could even escalate to an unconventional (nuclear) conflict. The high stakes demand strategic restraint from both sides.”
That bleak outcome is largely because China and the US are “increasingly paranoid about the other’s intentions,” Roubini said, and both are making political tensions worse by attempting to strengthen their defenses.
China has suggested it could retaliate if its firms continue to face harsh treatment in the US, and updated its anti-espionage laws earlier this year to increase oversight over foreign businesses.
But fears that China could rise as a dangerous world power are overblown, Roubini said, given the fact that China’s economy is currently struggling from deflation, high debt levels, and poor growth prospects. Meanwhile, the US is underestimating its own economic advantage in growth industries, such as in AI, quantum computing, and robotics.
He suggested the US should be careful to de-risk, but not economically decouple from China. And China should stop its military drills around Taiwan, while both nations should work together on key threats to the global economy, he said, like climate change and regulating artificial intelligence.
Roubini has repeatedly warned of catastrophe for the global economy over the past year. That’s because the world is facing a slew of “megathreats,” he previously said, which include inequality, rampant disease, and the robot revolution putting people out of work.