The tariff battle with the U.S. will probably cost China 700,000 jobs, or more in the event of further escalation.

The job losses would come if the U.S. imposes 25 percent tariffs on $200 billion in Chinese exports and China retaliates by devaluing its currency by 5 percent and adding to levies on U.S. goods, according to economists led by Haibin Zhu at JPMorgan Chase & Co. If China doesn’t retaliate at all, 3 million people could lose their jobs, they wrote in a research note Tuesday.

The study highlights the more profound impacts of the tariff battle on the world’s second largest economy, which is grappling with a slowing pace of growth and a massive debt pile. Things may get even worse: if the U.S. imposes 25 percent tariffs on all Chinese imports and China retaliates with the levies already announced, the measures will mean 5.5 million lost jobs and 1.3 percentage points cut off gross domestic product growth.

“If the U.S. further escalates the tariff war, the impact on China will be larger,” they wrote in the note. While the overall impact is still manageable, the rising unemployment could become a major policy concern, they wrote. “If unemployment increases sharply, it will change the policy reaction function and the risk is biased towards bolstered policy easing.”

A cheaper yuan would help the economy weather such shocks. In a worst-case scenario in which more than 5 million jobs are at risk, choosing to devalue the currency by around 12 percent in 2019 compared to 2018 would offset the effect on the GDP and narrow the net job losses to 0.9 million, according to the analysts.

However, that would lead to $332 billion in capital outflows, burning more than a tenth of the nation’s foreign exchange reserves, they calculated. That would be a situation that policymakers may want to avoid after the experience of massive capital flight caused by a shock devaluation in 2015.