A former senior World Bank adviser has said that current conditions in the global economy have the potential to trigger a possible trade war between China and the rest of the world.

Carl Dahlman said a greater concern is that there are no existing international laws in place to resolve such disputes, should they arise.

The situation is especially risky this year, with several countries like the US undergoing possible political change through elections.

Anti-China rhetoric is common during every American election year, but it appears to be louder this year as the jobless rate in US remains high, while China's trade surpluses continue to grow.

Guo Xiangang, vice president of the China Institute of International Studies, said: "America's economy is in trouble this year. Naturally, Americans will blame it on China, like the unbalanced trade, currency exchange. (They will) also blame the high jobless rate in US as a result of jobs flowing to China. To win votes, (presidential candidates will intensify their criticism on China with regard to these problems."

China has so far not responded to the criticism.

Derek Han, chairman of Blue Oak Global Holdings, said: "The Chinese leaders understand that there is a certain amount of posturing during an election campaign.

"I am sure it is not something that is pleasant to see from the Chinese side that all the fingers are being pointed at them. But up till now, nothing has really changed after the election because...a realism has settled in with every administration that this is not the way you can really resolve any problems. And also because the Chinese and the American economies are really so closely intertwined there is really not a lot that can be done."

However, Mr Dahlman has warned in his new book, "The World Under Pressure", that tension towards China is rising not just from America but other countries like Brazil - which has implemented measures like levies on Chinese imports.

And there is a growing global concern over the world's second largest economy buying up natural resources from Africa and the Middle East.

Mr Dahlman said: "When you have big changes in relative power, they tend to lead to trade wars, resource wars, cold wars like what we had with Russia, or worst yet, conventional wars. In my analysis, I am not expecting it to happen, I am just saying that there are these big tensions which are growing and they have to be defused."

But he said that existing rules and mechanisms under international institutions like the World Trade Organisation and the International Monetary Fund no longer work under the new world order.

Mr Dahlman said the West needs to acknowledge the growing economic clout of developing countries like China by giving them a bigger voice.

But in the current economic climate, relinquishing power could be hard to do.

While frictions do exist, countries are also less inclined to enter trade wars right now, because unlike the past, today's global economies are just too connected and countries would have more to lose than ever before should a global conflict really happen.

channelnewsasia.com