China's economy faces a 'triple threat' - and one economist says the trade war is only part of the story

Demographic data showed China's working population shrinking at the start of the 2010s, and the trend projects a net decline in population starting as soon as 2032, Koo wrote.

The combination of a middle-income trap and a looming population decline is "extremely rare" for a country of China's economic strength, the economist wrote.

"These two factors alone would pose a difficult challenge for any nation, and now China must also deal with the trade war initiated by the US president."

With just 13 years before the projected pullback begins, the country should focus on developing its own intellectual property and pivot away from serving as "the world's factory, Koo added.

The trade dispute between two of the world's economic superpowers is well into its second year, and apart from delayed tariffs and pledges to continue talks, not much progress toward a resolution has been made.

China may have been too quick to pivot from foreign investment to domestic innovation with its Made in China 2025 plan, Koo said, and the trade war could damage the manufacturing industries that drove the Chinese economy for so long.

"The Chinese economy remains heavily dependent on foreign businesses not only for manufacturing know-how but also for overseas marketing and sales," the economist wrote. "In view of that, the authorities should have treated foreign capital far better than they did."

If the country hopes to recover and keep its foreign investment intact, it should come to a trade agreement with President Trump before the 2020 US election, Koo said. If Trump loses, "it may well become impossible to separate geopolitics from trade issues."