China’s exports hold up despite US tariffs

China’s President Xi Jinping (R) meets former US secretary of state Henry Kissinger at the Great Hall of the People in Beijing on November 8, 2018. (Photo by THOMAS PETER / POOL / AFP)

China’s exports to the United States and the rest of the world saw a surprise jump in October, data showed Thursday, suggesting businesses are ramping up trans-Pacific shipments before higher tariffs kick in.

Relations between the world’s top two economies have soured sharply this year as US President Donald Trump slapped higher taxes on roughly half of the Chinese imports and threatened to hit the other half.

Top Chinese officials are currently in Washington, with hopes that those talks could pave the way for a breakthrough on the trade later this month when Trump meets Chinese President Xi Jinping at the G20 summit in Argentina.

Still, in October exporters continued to hurry goods across the Pacific, with China’s exports to the US surging 13.2 percent from the same period last year, according to the data released by China’s customs administration.

“October’s surprisingly strong export performance seems to have been partly due to a continuous front-loading effect and is unlikely to be a long-term trend,” said Betty Wang, China economist at ANZ.

China’s trade surplus with the US fell to $31.8 billion in October, from a record $34.1 billion in September.

October marked the first full month of US tariffs on $200 billion of Chinese goods — but the tax rate is set to jump from 10 percent to 25 percent come January.

Trump has repeatedly boasted the US could not lose a trade war with China, but Beijing’s retaliatory tariffs on American goods have been more damaging to trade so far.

China’s imports from the US fell 1.8 percent in October on-year, while its surplus with the US expanded to $258 billion for the first 10 months of the year.

A weakening yuan, which has slipped about nine percent against the dollar from its January high, has helped offset the extra tariff costs on Chinese products.

Analysts are not optimistic about the upcoming meeting between the two heads of state will resolve the friction.

“We do not expect the sideline meeting of Xi and Trump during the G20 would be positive,” said Iris Pang of ING Bank.

“We just hope that the meeting won’t create further damage to the trade relationship,” Pang told Bloomberg News.

Global trade
China’s overall trade — what it buys and sells with all countries including the US — logged a $34 billion surplus for the month.

Exports jumped 15.6 percent for October on-year, beating the 11.7 percent forecast by Bloomberg News, while imports rose 21.4 percent on-year, well above the forecast 14.5 percent.

“While shipments to the US held up well, those to other parts of the world grew even faster,” said Louis Kuijs of Oxford Economics.

“Global demand may be holding up better than feared, while a weaker Chinese yuan is also helping the country’s exporters.”

Robust imports showed China’s economy remained stable despite posting 6.5 percent GDP growth in the third quarter — its slowest pace for nine years.

Beijing could be pulling up from its campaign to tackle mounting debt, which weighed heavily on growth, analysts said.

“Robust imports, especially commodities, could be an indication of a rebound in infrastructure investment and a stabilisation of the property market,” said ANZ’s Wang.

Despite the resilient trade data, analysts forecast the US-China feud will hit growth in coming months.

“Trade tensions will be a lingering concern for the global economy,” Wang said.

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