The massive trade dispute between the U.S. and China — which some expect to drag through next year — will not bring about a global, economic cold war, according to Morgan Stanley. "I think these are just two big animals learning to co-exist with each other," Colm Kelleher, the president of Morgan Stanley, said on Thursday. He was responding to a question from CNBC's Sri Jegarajah on whether rancor between the two countries signals the start of a new kind of cold war. The two largest economies in the world have had a difficult relationship this year: The U.S. imposed tariffs on $250 billion worth of Chinese goods, and China responded with retaliatory tariffs on $110 billion of American imports.

My view is that President Trump is a deal maker, he's realistic. He has a lot of support from the United States ... on whether China has benefited too much from globalization, and he's trying to re-address that balance. Colm Kelleher president, Morgan Stanley

The tariff fight between the two countries is often cited as the biggest risk to global investor confidence and a threat to the world economy. The International Monetary Fund, for instance, cut its global growth forecasts for this year and next as a result of the trade fight. U.S. President Donald Trump and Chinese President Xi Jinping are expected to meet at the G-20 summit this week, with trade high on their agenda. Kelleher acknowledged he can't know how the meeting will turn out, but he said he's hopeful that it will mark the start to "a more practical cooperation between the two basically superpowers." "My view is that President Trump is a deal maker, he's realistic. He has a lot of support from the United States ... on whether China has benefited too much from globalization, and he's trying to re-address that balance," Kelleher said at the Morgan Stanley 17th Annual Asia Pacific Summit in Singapore. "I think even the Chinese themselves understand the merit of some of that" sentiment, he added. The Chinese government under Xi is "very practical" and has shown "real evidence" of opening up their markets.

'Face-saving deals'

All that means there is a way out of the tariff fight, Kelleher said. Even if the U.S. ends up slapping 25 percent in tariffs on all Chinese imports, that would slice 1.3 percentage point off China's economic growth — a number that's "meaningful," but not something that Beijing cannot overcome, he said, citing Morgan Stanley research. "There's plenty of things the Chinese can do," said Kelleher. "So, I do think we can get a way out of this. I think there'll be some dealing done. There'll be some face-saving deals done, and I think we'll move forward."

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