London: China is at a crossroads. It fears trade and technology wars with the United States will spill over into the finance sector, according to former prime minister Kevin Rudd.

The Asian nation must decide whether to retreat inwards or further liberalise its economy, he said.

Delivering the opening address at a conference on China's economic future at Chatham House, a London think tank, Rudd predicted the US and China would strike a politically acceptable trade deal before the end of the year.

He said this was because both countries needed stability. The US because of the 2020 presidential election, and China because of the Communist Party's centenary in 2021, when President Xi Jinping will face internal pressure if the economy has not sustained economic growth above 6 per cent.