Chinese President Xi says a trade war hurts the US and China

Chinese President Xi Jinping said Tuesday that there will be no winners in a trade war with concerns on the rise over Donald Trump’s threat to punish China with high tariffs.

Xi pushed back against the proliferation of protectionist measures and instead championed the importance of world trade for all nations against a backdrop of sweeping worries about globalization. 

{mosads}”Whether you like it or not, the global economy is the big ocean that you cannot escape from,” Xi said during remarks at the the World Economic Forum in Switzerland.

“Any attempt to cut off the flow of capital, technologies, products, industries and people between economies, and channel the waters in the ocean back into isolated lakes and creeks is simply not possible,” he said.

The Chinese leader seemed to acknowledge that firing up a trade war from either Beijing or Washington would “only cause injury and loss to both sides.”

Xi, the first-ever leader from Beijing to speak at the economic forum in Davos, didn’t specifically name Trump in his remarks but it seemed clear he was presenting the negative consequences of what would happen if the president-elect opted to follow through with his promise to punish China for trade violations and undervalued currency.

“Pursuing protectionism is like locking yourself in a dark room, which would seem to escape the wind and rain, but also block out the sunshine and air,” Xi said.

Brian Moynihan, CEO of the Bank of America, said that Xi “is very much concerned that there will be a retraction from trade and the ability of trade to help the world grow and the ability to rebalance the imbalances in economies and stuff.”

“I think that’s the fear out there. I think we just got to let it play out for a while,” Moynihan told CNBC’s “Squawk Box” on Tuesday.

Trump has said he would slap 45 percent tariffs on some Chinese imports and has vowed to label China a currency manipulator even though Beijing has been working to maintain the value of the yuan. 

In a Wall Street Journal interview on Friday, Trump said he wanted to reset the trading relationship with China saying that “everything is under negotiation.”

“The biggest problem we have is China is so horribly imbalanced in trade with us,” Trump said. “It’s so one-sided that if you brought it down even to fairness, just fairness … it’s a tremendous amount of money.”

Devin Wenig, CEO of eBay, told CNBC’s “Squawk Box” that while there is uncertainty surrounding Trump’s trade policies “for a company that is a very large exporter of Chinese goods around the world, and U.S. goods outside the world, we obviously want free trade and we hope that the rhetoric will dampen down.”

Xi touted the need for a more resilient global financial market that would protect against risks and volatility and would in turn calm worries about global trade. 

And he acknowledged that while economic globalization has created new problems “we should adapt to and guide economic globalization, cushion its negative impact, and deliver its benefits to all countries and all nations.”

“There is no point in blaming economic globalization for the world’s problems because that is simply not the case,” Xi said. “The history of mankind has shown us that problems are not to be feared. What should concern us is the refusal to face up to the problems.”

The United States and China are the world’s largest economies and their relationship is economically and geopolitically critical.

Treasury Secretary Jack Lew noted the importance of the U.S.-China relationship.

“I think that one has to engage with China across the broad spectrum of issues that we deal with China on and push very hard to make progress, but also recognize when they move in a positive direction,” Lew said told CNBC on Tuesday. 

“That’s what we’ve tried to do,” he said.