China’s exports, imports shrink more than expected in September
China’s exports and imports shrank more than expected last month, as existing United States tariffs and the ongoing slowdown in global trade combined to undercut demand.
Exports decreased 3.2 per cent in US dollar terms from a year earlier while imports declined 8.5 per cent, leaving a trade surplus of US$39.65 billion (RM165.92 billion), said the Customs administration yesterday. Economists had forecast that exports would drop 2.8 per cent, while imports would shrink by six per cent.
The weak performance underlines the importance of the “Phase One” deal struck last week, as China’s economy suffers from slowing demand both at home and abroad.
The slump in imports in particular bodes ill for the domestic economy, and output is expected to have grown at the slowest pace in the third quarter in almost 30 years, according to estimates ahead of data due on Friday.
“The key driver definitely is the slowing global economy,” said Macquarie Securities Ltd head of China economics, Larry Hu.
Exports to the US dropped almost 22 per cent last month and imports declined almost 16 per cent year-on-year, for a surplus of about US$26 billion.
“This is obviously the damage done by the trade war,” said ING bank NV economist Iris Pang.
Exports to Vietnam rose, “which I believe could be goods rerouting to Vietnam for some processing then to US to avoid tariffs”.
The tentative agreement pauses US tariff increases in exchange for increased Chinese purchases of agricultural goods.
If that sticks, a boost to confidence may be ahead, though it’s not clear if another round of tariffs due for December will be implemented or not.
Before the deal announced over the weekend, Oxford Economics forecast that the worst was still to come for US-China trade, which has already fallen 20 per cent.
“Bilateral trade is likely to decline considerably further, especially if tariffs are extended to more goods as threatened,” according to its report.