China's exports to US surge as higher tariffs loom

A cargo ship docking at a port in Qingdao in east China's Shandong province, yesterday. Chinese exports to the US surged 13.2 per cent last month from the same period last year, according to the data released by China's Customs administration.
A cargo ship docking at a port in Qingdao in east China's Shandong province, yesterday. Chinese exports to the US surged 13.2 per cent last month from the same period last year, according to the data released by China's Customs administration.PHOTO: AGENCE FRANCE-PRESSE

Data suggests firms ramping up shipments to US ahead of Jan levy hike; weaker yuan helps

BEIJING • China's exports to the United States and the rest of the world saw a surprise jump last month, data showed yesterday, suggesting that businesses are ramping up transpacific 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 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 trade later this month when Mr Trump meets Chinese President Xi Jinping at the G-20 summit in Argentina.

Still, exporters continued to hurry goods across the Pacific last month, with China's exports to the US surging 13.2 per cent 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 China economist Betty Wang at ANZ.

China's trade surplus with the US fell to US$31.8 billion (S$43.6 billion) last month, from a record US$34.1 billion in September.

October marked the first full month of US tariffs on US$200 billion of Chinese goods - but the levy rate is set to jump from 10 per cent to 25 per cent come January.

Mr 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 per cent last month on-year, while its surplus with the US expanded to US$258 billion for the first 10 months of the year.

A weakening yuan, which has slipped about 9 per cent against the US dollar from its January high, has helped offset the extra tariff costs on Chinese products.

Analysts are not optimistic that 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 G-20 would be positive," Ms Iris Pang of ING Bank told Bloomberg News.

"We just hope that the meeting won't create further damage to the trade relationship."

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

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

"While shipments to the US held up well, those to other parts of the world grew even faster," said Mr 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 per cent gross domestic product growth in the third quarter - its slowest pace in 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 Ms Wang.

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

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on November 09, 2018, with the headline 'China's exports to US surge as higher tariffs loom'. Print Edition | Subscribe