China’s exports to US tick up as traders try to beat tariffs

Daniel Fowler
November 12, 2018

Growth in imports for October quickened to 21.4 percent from 14.3 percent in September, again beating analysts' forecast for a slight cooling to 14 percent.

China's trade surplus with the United States narrowed to Dollars 31.8 billion from September's record Dollars 34.1 billion.

While the monthly surplus has eased somewhat to $31.78 billion in October from a record $34.13 billion in September, it remains elevated by historical trends.

One reason for the surge is companies are eager to avoid even higher duties in a few months' time: The US tariffs on $200 billion of Chinese goods that kicked in on September 24 are set to rise from 10% to 25% at the end of the year.

Despite escalating trade tensions with the U.S., Chinese data show the economy has largely held up so far.

While China's exports are expected to falter soon, its imports, especially commodities, could remain strong for months to come as Beijing rolls out more measures such as infrastructure spending to boost domestic demand, economists at ANZ said.

October was the first full month after the latest United States tariffs on Chinese goods went into effect on Sept 24.

"Global demand may be holding up better than feared, while a weaker Chinese yuan is also helping the country's exporters". Between April and the end of October, the yuan lost 11.4 per cent against the United States dollar. "We are not particularly optimistic on China export growth in 2019".

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The PMI, which gives a snapshot of operating conditions in the manufacturing sector, dipped to 50.2 in October - just above the dividing line of 50 between expansion and contraction.

"The government would say confidence is the issue and the trade war is the trigger, so that's why we should blame the trade war", Xie said.

"The strong export growth in October was buoyed by front-loading activities by exporters.", said Iris Pang, Greater China Economist at ING in Hong Kong, noting the month is traditionally quieter due to long holidays.

Exports to the United States jumped 13%, despite higher tariffs.

Markets are now keeping their eyes on a much-touted meeting later this month between President Donald Trump and President Xi Jinping at the G-20 in Buenos Aires, Argentina. Xi presided over the opening of an import fair Monday in Shanghai that is meant to rebrand China as a welcoming market for other countries' goods.

With no clear resolution of the trade conflict on the horizon, Beijing is increasingly nervous about the outlook for the economy, which grew 6.5 per cent in the third quarter, the slowest pace in a decade.

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

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