Abu Dhabi, UAEMonday 18 November 2019

US tariffs push China's September exports and imports into deeper contraction

The downbeat data may reinforce expectations that Beijing should introduce more stimulus measures

China’s exports fell at a faster pace in September while imports contracted for a fifth straight month. AFP 
China’s exports fell at a faster pace in September while imports contracted for a fifth straight month. AFP 

China’s exports fell at a faster pace in September while imports contracted for a fifth straight month, pointing to further weakness in the economy and underlining the need for more stimulus as the trade war with the US drags on.

The downbeat data is likely to reinforce expectations that Beijing needs to introduce more stimulus measures to avert a sharper economic downturn, despite tentative signs of a thaw in tense trade relations between the world’s top economies.

Following talks last week, US President Donald Trump on Friday outlined the first phase of a deal to end the trade dispute and suspended a threatened tariff hike set for October 15. But existing tariffs remain in place and officials on both sides said much more work is needed before an accord could be agreed.

September marked another major escalation in the dispute, with Washington imposing 15 per cent tariffs on more than $125 billion (Dh459bn) in Chinese imports from September 1, and Beijing hitting back with retaliatory levies.

September exports fell 3.2 per cent from a year earlier, the biggest fall since February, customs data showed on Monday. Analysts expected a 3 per cent decline in a Reuters poll after August’s 1 per cent drop.

“The headline figures suggest that global demand softened last month, adding to the pressure from the US tariffs that went into effect in September,” said analysts at Capital Economics.

Some economists attributed the deterioration in exports to a fading in the so-called “front-loading” effect. Some Chinese firms had rushed to ship goods to the United States ahead of the September deadline, supporting overall July and August export readings.

Total September imports fell 8.5 per cent after August’s 5.6 per cent decline, the lowest since May. Analysts had expected them to fall by 5.2 per cent.

Despite more than a year of growth boosting measures, China’s domestic demand has remained stubbornly weak as economic uncertainty weighs on business and consumer confidence and discourages fresh investment.

China reported a trade surplus of $39.65bn last month, compared with a $34.84bn surplus in August. Analysts had forecast $33.3bn.

Its trade surplus with the US stood at $25.88bn in September, narrowing from August’s $26.96bn.

China’s exports to the US fell 10.7 per cent from a year earlier in dollar terms in January-September, while US imports dropped 26.4 per cent during that period, the customs data showed.

Though President Trump had agreed not to proceed with a hike in tariffs set for Tuesday, US Trade Representative, Robert Lighthizer said Mr Trump had not made a decision about tariffs that were subject to go into effect in December.

Analysts believe China’s economic growth cooled further in the third quarter from a near 30-year low of 6.2 per cent hit in April to June, and is threatening to breach the lower end of the government’s full-year target of 6 to 6.5 per cent.

Some economists forecast growth could fall into the upper 5 per cent range in 2020 due to a combination of cyclical and structural factors.

Updated: October 14, 2019 11:36 AM

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