Tag: China imports

China’s trade with US sinks in November amid tariff war

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China’s trade with the United States sank again in November as negotiators worked on the first stage of a possible deal to end a tariff war.

Customs data on Sunday showed exports to the United States fell 23 percent from a year earlier while imports of American goods were off 2.8 percent.

Exports to some other countries including France rose, helping to offset the loss.

Total Chinese exports were off 2.5 percent from a year earlier despite weakening global demand while imports were up 0.2 per cent.

US President Donald Trump agreed to postpone a planned tariff increase in early October following trade talks but penalties already imposed on billions of dollars of goods stayed in place.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China exports grow despite US tariffs, but import slump most in nearly three years

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China’s exports unexpectedly returned to growth in May despite higher US tariffs, but imports fell the most in nearly three years in a further sign of weak domestic demand that could prompt Beijing to step up stimulus measures.

Some analysts suspected Chinese exporters may have rushed out shipments to the United States to avoid new tariffs on $300 billion of goods that President Donald Trump is threatening to impose in a rapidly escalating trade dispute.

But Monday’s better-than-expected export data is unlikely to ease fears that a longer and costlier US-China trade war may no longer be avoidable, pushing the global economy towards recession.

China’s May exports rose 1.1 percent from a year earlier, compared with market expectations for a modest decline, customs data showed.

“We expect export growth to remain positive in June, likely supported by continued front-loading of US-bound exports, but it should then tumble in the third quarter when we expect the threatened tariffs to be imposed,” economists at Nomura said in a note to clients.

“Therefore, we believe Beijing will likely step up its stimulus measures to stabilise financial markets and growth.”

Business distortions related to April’s cut in the value-added tax (VAT) may also have eased, helping export readings, Nomura added.

Analysts polled by Reuters had expected May shipments from the world’s largest exporter to have fallen 3.8 percent from a year earlier, after a contraction of 2.7 percent in April.

While China is not as dependent on exports as in the past, they still account for nearly a fifth of its gross domestic product.

Trade tensions between Washington and Beijing escalated sharply last month after the Trump administration accused China of having “reneged” on promises to make structural changes to its economic practices.

Trump on May 10 slapped higher tariffs of up to 25 percent on $200 billion of Chinese goods and then took steps to levy duties on all remaining $300 billion Chinese imports. Beijing retaliated with tariff hikes on US goods.

Trump has said he expects to hold a meeting with Chinese President Xi Jinping at a G20 leaders’ summit late this month, but analysts such as Capital Economics believe the chances of a lasting trade deal are receding as both sides appear to be digging in for a long battle.

Trade sanctions are spreading from goods to services, Capital Economics noted last week, with China issuing a warning to citizens about risks of travelling in the United States and US lawmakers pushing to tighten visas for Chinese students.

Damage from the trade war along with a broader softening in global demand will make 2019 the worst year for trade since the financial crisis a decade ago, with only 0.2 percent growth, according to economists at ING.

China’s trade surplus with the United States, a major irritant for Washington, widened to a four-month high of $26.89 billion in May, from $21.01 billion in April, Monday’s data showed.

Exports to the U.S. fell at a more moderate pace of 4.2 percent after dropping 13.2 percent in April, while China’s imports of U.S. goods declined 26.8% from a year earlier.

IMPORTS FALL WORST IN ALMOST 3 YEARS

China’s May imports were much weaker than expected, falling 8.5 percent, the sharpest drop since July 2016. That left the country with a trade surplus of $41.65 billion for the month.

Analysts had forecast imports would fall 3.8 percent, reversing an expansion of 4 percent in April, which some had suspected was related to the reduction in the VAT.

Highlighting sluggish demand, imports of copper fell. The red metal is widely used in construction, electrical goods and manufacturing and is considered a bellwether for the health of an economy.

For January-May, China’s total exports rose just 0.4 percent from a year earlier, while imports declined 3.7 percent.

MORE SUPPORT MEASURES EXPECTED

As trade pressures intensify, analysts believe China will loosen policy further in months ahead to shore up economic growth.

Investors are also watching to see how much Beijing allows the yuan to weaken to offset higher US tariffs. The tightly-managed currency has depreciated nearly 3 percent against the dollar since trade tensions flared in early May and are nearing a closely watched support level.

Analysts do not expect a surprise devaluation from China like one in 2015, which could risk capital outflows and further angering Washington, but some believe more yuan weakness is inevitable if the trade war drags on.

Separate data on Monday showed China’s foreign exchange reserves rose unexpectedly in May, suggesting the central bank has intervened only lightly to cushion the recent fall in the yuan.

The central bank has cut banks’ reserve requirements (RRR) six times since early 2018 and guided some interest rates lower while urging banks to lend more and keeping ample amounts of liquidity in the banking system.

A growing number of analysts believe it could cut benchmark interest rates in the event of a full-blown trade war, especially if the US Federal Reserve eases policy first.

Beijing also has leaned more heavily on fiscal stimulus than in past downturns, possibly due to high levels of debt left over from past credit sprees. It has fast-tracked infrastructure projects, cut taxes for companies and raised export tax rebates.

The economy has yet to get back on firm footing, however. Factory activity in May contracted more than expected amid weak demand at home and abroad, an official survey showed.

Citing heightened trade uncertainties, the International Monetary Fund (IMF) last week cut its 2019 economic growth forecast for China to 6.2 percent, which would mark the country’s weakest expansion in 29 years.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China defends free trade ahead of Ross visit

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China reiterated its commitment to the global trade order on Friday, hours after Washington slapped new tariffs on imports from key allies and a day before US Commerce Secretary Wilbur Ross was due in Beijing for talks to avert a trade war.

While many countries share US frustration over Chinese trade and economic practices, critics of US policy under President Donald Trump have warned that Washington risks alienating the European Union, Canada and Mexico with 25 percent tariffs on steel and 10 percent on aluminium.

“All countries, especially the major economies, should resolutely oppose all forms of trade and investment protectionism,” Foreign Ministry spokeswoman Hua Chunying told a regular media briefing, when asked about the US move.

This weekend’s trade talks come as Washington is engaged in fragile negotiations towards what would be a historic summit between Trump and North Korean leader Kim Jong Un, whose main diplomatic backer is Beijing.

Ross, who was preceded in Beijing this week by more than 50 US officials, is expected to press China to commit to buying more US agriculture, energy, and other products to narrow the $375 billion trade deficit.

One person with knowledge of Washington’s planning said the US approach for Ross’ visit was to keep the dialogue going.

Ross is “going there to tread water,” the person said, declining to be identified due to the sensitivity of the matter.

What had appeared to have been a trade truce between Beijing and Washington was upended this week when the White House said it would follow through on its threat of tariffs on $50 billion worth of Chinese imports, as well as restrictions on Chinese investments in the United States and tighter export controls.

Washington and Beijing have threatened tit-for-tat tariffs on goods worth up to $150 billion each.

“The more Trump is irritating allies and asking Chinese to buy stuff, the better off they are, because he’s not sitting there and attacking the hard issues,” the person said.

Those hard issues include what the US complains is rampant theft of intellectual property, as well as Beijing’s support for cutting-edge technologies under its Made in China 2025 policy.

Qualcomm Still in Question

On Friday, China’s markets regulator said it was still reviewing San Diego-based Qualcomm Inc’s $44 billion acquisition of NXP Semiconductors.

Some people familiar with the matter have told Reuters that approval may depend on progress of broader talks and a reprieve from a US government ban on sales by US companies to China’s ZTE Corp, penalised for illegally supplying gear to Iran and North Korea.

Reuters reported on Sunday that Qualcomm was expecting to meet this week in Beijing with China’s antitrust regulators in a final push to secure clearance for the deal.

Qualcomm made its latest submission regarding the deal to China’s State Administration for Market Regulation early this week, people familiar with the matter told Reuters.

China’s exports have mushroomed since joining the World Trade Organisation in 2001, making it the world’s second-largest economy. It has positioned itself as a defender of the global trade system in the face of Washington’s tougher stance under Trump.

China hopes its people and those of the United States, especially consumers, will continue to gain from mutually beneficial US-Sino trade relations, Vice Finance Minister Zhu Guangyao said on Friday.

Asked about Ross’ visit, the Chinese Foreign Ministry’s spokeswoman declined to give any details, referring the question to the Commerce Ministry, the government department that will host him and which has not given details, either.

“Of course, we have said that China’s door to dialogue and consultations is open,” Hua said.

“We believe that when it comes to the problems in Sino-US trade and business both sides should take a sincere attitude in the spirit of equality and mutual respect to use dialogue and consultations to seek a mutually beneficial win-win solution.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow