(Bloomberg) -- The U.S. escalation of trade tensions won’t solve any of its problems but will create volatility in global markets and hurt the world economy, China’s top financial regulator said Saturday.

Higher U.S. tariffs will have a “very limited” impact on China’s economy while hurting the U.S. about as much, said Xiao Yuanqi, spokesman for the China Banking and Regulatory Commission, reading a speech written by CBIRC Chairman Guo Shuqing.

Many of China’s exports can be redirected to the domestic market as the nation shifts to a more consumption-driven economy, Xiao said at a forum in Beijing. China will also find new export markets while continuing to ship many products to the U.S., as importers will be willing to share the tariff costs and some Chinese products prove difficult to replace, he said.

The world’s second-largest economy faces severe disruption from U.S. President Donald Trump’s planned increases in tariffs on its goods, and the associated uncertainty that the worsening trade war brings. The People’s Bank of China has warned that trade tensions with the U.S. could destabilize the global economy.

Xiao said China still has ample scope for more foreign capital in its financial sector, noting that it represents only 2% of the nation’s equity markets and 2.9% of its bond market, while by assets foreign banks and insurers represent 1.6% and 5.8% of their industries, respectively.

“We especially welcome companies with good market reputation and risk management practices that have expertise in wealth management, credit ratings, consumer finance, retirement and health insurance to enter China’s market,” Xiao said. He warned that speculators shorting the yuan would suffer large losses.

To contact Bloomberg News staff for this story: Yinan Zhao in Beijing at yzhao300@bloomberg.net;Lucille Liu in Beijing at xliu621@bloomberg.net

To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, Henry Hoenig, Stanley James

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