BEIJING: China’s exports and imports contracted less than expected in October, providing some relief for the economy as Beijing tries to reach a partial trade deal with Washington.
But even if a US-China trade deal is signed soon, economists say it is unlikely to help boost exports and manufacturing for some time yet and could still mean more stimulus is needed from Beijing to avert a sharper downturn.
China’s October exports fell for the third straight month, down 0.9 percent from a year earlier, customs data showed yesterday, less than a 3.9 percent fall forecast in a Reuters poll and September’s 3.2 percent contraction.
“Even if the ‘phase one’ US-China trade deal crosses the finish line, it is unlikely to alleviate the main headwinds facing exporters and outbound shipments look set to remain weak in the coming months,” said Martin Rasmussen, China economist at Capital Economics.
He attributed the rise in exports to a pick-up in US demand after both countries outlined an interim deal and Washington suspended a threatened tariff hike set for Oct 15.
There were other bright spots in the data. Exports to the United States in October fell 16.2 percent, less than a 21.9 percent drop the previous month, according to Reuters calculation based on customs data.
Betty Wang, senior China economist at ANZ, said anecdotal evidence also showed exports may have been boosted as Chinese firms rushed out hi-tech shipments after the US government put some of the country’s tech firms on a trade blacklist.
If a partial deal is reached this month, it is widely expected to include a US pledge to scrap tariffs scheduled for Dec 15 on about $156 billion worth of Chinese imports, including cell phones, laptop computers and toys.
So far, US President Donald Trump has only cancelled a scheduled Oct 15 tariff increase on $250 billion goods.
China’s imports shrank for the sixth consecutive month, though the 6.4 percent drop was smaller than an expected 8.9 percent and September’s 8.5 percent decline.
That left China with a trade surplus of $42.81 billion in October, versus September’s $39.65 billion surplus. Analysts had forecast a $40.83 billion surplus.
Despite the more modest drop in imports, domestic demand appeared to remain weak, with imports of iron ore and copper falling.
The trade data lines up with recent readings on shrinking factory activity and bleak producer prices. The slowdown points to lingering weakness in domestic demand and the limited impact of policy stimulus so far. – Reuters