President-elect Donald Trump will retreat from the threatening campaign rhetoric used towards China once he is inaugurated, Yale economist Stephen Roach told CNBC. The former chairman of Morgan Stanley Asia told CNBC on Friday that Trump's pledge, in which he declared he would denounce China as a currency manipulator on his first day as president, will be scaled back. "This is an area where (Trump) is going to back down… somewhat, not completely. "It's a two-way relationship, the United States depends on China and China depends on the U.S. so if the U.S. goes toward unilateral tariffs or this absurd currency manipulation charge, we can expect retaliation from China," Roach added.



Opportunities with China

Trump has been consistent and explicit with his commitment to sanction China for its currency policy and even included the promise in his first 100-days action plan as president. Roach is one of several critics to question this stance that Trump has adopted and instead has urged the President-elect to consider the opportunities that working directly with China can bring to the U.S. "Cutting a deal with the Chinese on a bilateral investment treaty, which is something that has eluded the Obama administration for the last 8 years, but if Trump were to do a deal, and he claims to be a master at the art of the deal, that would open Chinese markets to US companies. "What better thing for a businessman to do than to provide market opening opportunities for hard-pressed US companies," Roach said.

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