Peter Costello: US, China trade war may hit Australian retirees

Former Treasurer Peter Costello has warned that Australian retirees could lose their life savings is the US-China trade war escalates further.

Former Treasurer Peter Costello has warned that unless China and the US come to a trade compromise, Australian retirees may be the ones to suffer.

Mr Costello has told The Australian that the trade war between the world’s two largest economies has already hurt Australian retirees and urged both parties to reach a deal.

“Unless the parties can sit down and actually sensibly negotiate, I think you are going to have a lot of uncertainty and a lot more gyrations on global markets in the weeks which are ahead,” Mr Costello told The Australian.

Former treasurer Peter Costello. Picture: Aaron Francis/The Australian

“Australian retirees have lost money,” Mr Costello said. “Superannuation funds have lost money. If this were to continue, this will ­affect Australian savings and ultimately will affect the budget.”

The S & P/ASX 200 share index closed down 2.4 per cent — bringing two-day losses to $86 billion.

US President Donald Trump (L) and China's President Xi Jinping. Picture: AFP

Mr Costello also called on China to accelerate moves to float its exchange rate.

“The Chinese currency would be better if it were more flexible; we have argued for a long time that China should move to more of a market system,” he said.

RBA Governor Philip Lowe revised Australia’s economic outlook. Picture: Adam Yip

US President Donald Trump has branded China as a “currency manipulator” and vowed more tariffs on $US300 billion of Chinese imports from next month, sending markets into a tailspin.

Mr Trump dismissed concerns over a protracted trade war with China overnight.

“Massive amounts of money from China and other parts of the world is pouring into the United States for reasons of safety, investment, and interest rates!” Mr Trump tweeted on Tuesday. “We are in a very strong position.”

Reserve Bank of Australia governor Philip Lowe yesterday revised down the RBA’s outlook for growth in 2019, from 2.75 to 2.5 per cent, and revised forecasts that the jobless rate would fall below 5 per cent in the short term.