China's U.S. Exports Tumble as Tariffs Bite -- Update
October 14 2019 - 3:53AM
Dow Jones News
BEIJING--China's exports to the U.S. shrank by more than
one-fifth last month, hit by heavier tariffs, underscoring the
urgency for Beijing to resolve trade friction with Washington.
Chinese shipments to the U.S. slumped nearly 22% in September
from a year earlier, accelerating from a 16% decline in August,
data from the General Administration of Customs showed Monday. The
U.S. decline was a major factor, along with a slowing global
economy, in the 3.2% drop in total exports in September. That
compared with August's 1% decrease and was slightly worse than
economists' expectations.
High-level trade talks between China and the U.S. in the past
few days yielded a truce. President Trump said the U.S. would
shelve a planned increase in tariffs on $250 billion worth of
Chinese goods in return for China's assurance it would buy
agricultural products from the U.S. worth $40 billion to $50
billion. The outcome was seen as something of a win for China as it
allowed Beijing to postpone action on concessions it doesn't want
to make.
The thaw in tensions lifted market sentiment, with Chinese stock
markets surging by more than 1%, though many economists remained
cautious about the impact of the partial deal and the outcome of
future trade negotiations.
The latest trade agreement is unlikely to help with China's
trade outlook, said Larry Hu, an economist with Macquarie Group
Ltd., pointing to slower global economic growth as the main culprit
in the weakening of China's exports.
"The mini trade deal was aimed at damage control, or stop things
from getting worse," he said. "It's unrealistic to expect Chinese
trade or the global economy to recover any time soon."
Mr. Trump and Chinese President Xi Jinping could meet and sign
the first phase of a deal in mid-November, at the Asia-Pacific
Economic Cooperation summit in Chile. The U.S. hasn't made a
decision on the planned December tariffs on $156 billion in Chinese
goods. Beijing will likely argue hard for the U.S. to remove that
round, too.
While acknowledging the impact of the trade friction with the
U.S., a spokesman for China's customs authority, Li Kuiwen, said
China is hopeful about advancing bilateral ties as the talks
continue.
"We expect Sino-U.S. trade to be as sunny as today's weather and
to develop further in a healthy way," Mr. Li said.
The partial deal probably won't alleviate the main challenges
facing Chinese exporters, as existing U.S. tariffs and a further
slowdown in global growth will keep exports subdued in the coming
quarters, economists at Capital Economics said in a note to
clients.
Shipments to China's two largest trading partners also softened
last month. Exports to the European Union grew only 0.12% from a
year earlier, slowing from 3.2% in August. Shipments to Southeast
Asian countries rose 9.7%, also cooling from 11% growth in
August.
Meanwhile, lower exports and stubbornly sluggish domestic demand
contributed to a fifth straight monthly drop in Chinese imports.
Softer exports tend to weigh on China's imports as many imported
goods are used to make export products.
Imports slid 8.5% on year in September, a bigger decline than
economists projected and extending August's 5.6% drop. China's
imports from the U.S. slipped 15.7% on year in September, narrowing
from a 22.3% decline in August, the customs data showed.
Due to the sharp drop in imports, China's overall trade surplus
widened to $39.65 billion in September, from August's $34.8 billion
surplus. Economists had expected a $34.05 billion surplus.
Chinese authorities started 2019 with a burst of stimulus
efforts, including tax cuts and increased lending to small
businesses. Policy makers have since refrained from flooding the
economy with excess cash and easing property controls for fear of
stoking asset bubbles and driving up debt levels. It has encouraged
local governments to issue more bonds to fund infrastructure
construction.
Beijing will now probably need to step up policy-easing
measures, as it interprets weak imports as an indicator of
worsening domestic demand, said Mr. Hu of Macquarie.
"It's just a matter of when and how much they want to stimulate
more," he said.
Liyan Qi, Grace Zhu and Lin Zhu
(END) Dow Jones Newswires
October 14, 2019 03:38 ET (07:38 GMT)
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