China Septem­ber ex­ports surge, cre­at­ing record sur­plus with US de­spite tar­iffs

Iran Daily - - Global Economy -

China’s vast ex­port en­gine un­ex­pect­edly kicked into higher gear in Septem­ber, pro­duc­ing a record trade sur­plus with the US that could ex­ac­er­bate the al­ready-heated dis­pute be­tween Bei­jing and Wash­ing­ton.

An­a­lysts said last month’s strong ex­port growth — which might in­di­cate US tar­iffs are not bit­ing much yet — is un­likely to be sus­tained, Reuters re­ported.

But the ro­bust num­bers re­ported on Fri­day by China’s cus­toms agency — the last ones from China be­fore US con­gres­sional elec­tions on Nov. 6 — could prompt a re­ac­tion from US Pres­i­dent Don­ald Trump.

Septem­ber ex­ports rose 14.5 per­cent from a year ear­lier, the fastest pace since Fe­bru­ary, the cus­toms data showed. That was well above Au­gust’s 9.8 per­cent and a Reuters poll fore­cast of 8.9 per­cent.

“The big pic­ture is the Chi­nese ex­ports have so far held up well in the face of es­ca­lat­ing trade ten­sions and cool­ing global growth, most likely thanks to the com­pet­i­tive­ness boost pro­vided by a weaker ren­minbi,” said Ju­lian Evans-pritchard, se­nior China econ­o­mist at Cap­i­tal Eco­nom­ics.

“With global growth likely to cool fur­ther in the com­ing quar­ters and US tar­iffs set to be­come more pun­ish­ing, the re­cent re­silience of ex­ports is un­likely to be sus­tained.”

A weaker yuan, which has de­pre­ci­ated about six per­cent against the dol­lar this year, may have taken the sting out of the tar­iffs im­posed on $250 bil­lion of ex­ports to the US.

De­spite con­cerns from some of­fi­cials about the yuan’s de­pre­ci­a­tion, US Trea­sury staff have not rec­om­mended la­bel­ing China as a cur­rency ma­nip­u­la­tor in a com­ing re­port on for­eign ex­change rate prac­tices, ac­cord­ing to me­dia re­ports on Thurs­day.

China’s po­lit­i­cally-sen­si­tive sur­plus with the US was $34.13 bil­lion in Septem­ber, sur­pass­ing the record of $31.05 bil­lion in Au­gust.

Bei­jing’s ex­port data has been sur­pris­ingly re­silient to tar­iffs, pos­si­bly be­cause com­pa­nies ramped up ship­ments be­fore broader and stiffer US du­ties went into ef­fect, rais­ing con­cerns about a sharper drop in ex­port strength once all tar­iffs kick in.

“The front-load­ing im­pact is quite ob­vi­ous to me,” said Betty Wang, se­nior China econ­o­mist at ANZ in Hong Kong.

She cited a jump in ex­ports of elec­tri­cal ma­chin­ery — the big­gest ex­port item from China to the US — as a sign ex­porters might have pushed out ship­ments ahead of im­ple­men­ta­tion of the lat­est tar­iffs on $200 bil­lion in Chi­nese ex­ports.

Along with elec­tri­cal ma­chin­ery, ex­ports for tex­tiles, fur­ni­ture and chips all rose faster than in the pre­vi­ous month, the cus­toms data showed.

“If that’s the case then I think fur­ther down­side risk can be ex­pected in the fourth quar­ter,” Wang said.

Li Kui­wen, a spokesman from the coun­try’s cus­toms agency, also told re­porters trade growth may slow some­what in the fourth quar­ter.

The world’s two big­gest economies last slapped tit­for-tat tar­iffs on each other’s goods on Sept. 24. There is no spe­cific date set for the next round of tar­iffs, even as Trump has made re­peated threats to im­pose them on vir­tu­ally all Chi­nese goods.

China’s ex­ports to the US con­tin­ued to rise at a dou­ble- digit clip in Septem­ber com­pared with a year ear­lier, while im­ports fell for the first time since Fe­bru­ary.

Over the first nine months of the year, China’s sur­plus with its largest ex­port mar­ket to­taled $225.79 bil­lion, com­pared with about $196.01 bil­lion in the same pe­riod last year.

Growth in over­all im­ports for Septem­ber in­stead showed a mod­er­ate slow­down, in line with signs the broad cool­ing in do­mes­tic de­mand.

Im­ports rose 14.3 per­cent in Septem­ber, ver­sus a 19.9 per­cent gain in Au­gust, slightly miss­ing an­a­lysts’ fore­cast of a 15.0 per­cent growth.

Iron ore im­ports rose to their high­est level in four months as steel mills ramped up out­put ahead of win­ter pro­duc­tion re­stric­tions.

For trade with all coun­tries, China logged a sur­plus of $31.69 bil­lion for Septem­ber, com­pared with fore­casts in a Reuters poll for $19.4 bil­lion and Au­gust’s sur­plus of $27.89 bil­lion.

China’s econ­omy is feel­ing some heat from tar­iff dis­pute and signs of slow­ing that prompted the cen­tral bank on Sun­day to loosen pol­icy by cut­ting banks’ re­serve re­quire­ment ra­tio (RRR) for a fourth time this year.

Growth in China’s fac­tory sec­tor in Septem­ber stalled af­ter 15 months of ex­pan­sion, with ex­port or­ders fall­ing the most in more than two years, a pri­vate busi­ness sur­vey showed. An of­fi­cial sur­vey also con­firmed a fur­ther man­u­fac­tur­ing weak­en­ing.

To shore up growth, Bei­jing has pledged to in­crease ex­port tax re­bates from Nov. 1 for the sec­ond time this year and promised to cut cor­po­rate bur­den on a larger scale to help strug­gling Chi­nese firms.

REUTERS

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