Caught in the jaws of a new economic Cold War, the shipping industry is at the forefront of the trade dispute between China and the United States.
More than 90% of goods, products and raw materials are transported across the world through a network of oceanic superhighways.
To understand the true cost of the conflict between Beijing and Washington, it is worth sifting through the data of cargo traffic.
Earlier this week, the A.P. Moller-Maersk group released figures which showed that the spat could seriously hit demand for container shipping unless a deal can be hammered out.
With 750 vessels, the biggest player in the sector reported that imports into the US from China had grown between 5 and 10% in the third quarter compared to the same period last year.
But this was mainly due to major brands such as Walmart and Home Depot building up inventories to avoid new import duties.
“The irony is that after [US President] Donald Trump has turned up the rhetoric, the United States has started importing even more from China,” Soren Skou, the Danish conglomerate’s chief executive, told the media in Copenhagen.
“[He] can’t tell Nike, Walmart and Home Depot that they can’t import from China,” he added. “So they will continue to import and will work on solutions.”
Already Chinese imports from the US were down between 25 and 30% in the third quarter compared to the same period in 2017, figures from Maersk indicated. In the next two years, global container shipping could dip by 0.5 and 2% if trade tensions continue to rise.
“There will definitely be a price for the container industry to be paid,” Skou said, referring to a predicted slowdown next year.
Chilling data has become an everyday occurrence as the trade war grinds on. On Wednesday, another batch was released by the National Bureau of Statistics, illustrating Beijing’s efforts to prop up a cooling economy.
While industrial output and investment grew faster than expected last month on the back of a raft of government measures, retail sales softened.
“We remain bearish on the consumption outlook due to high household leverage, sluggish income outlook and underperforming financial markets,” Nomura Global Markets Research stated. “We believe the worst is yet to come, with growth slowing faster into spring 2019.”
Yet it would be wrong to blame all of China’s economic problems on the trade dispute. Before the summer round of tit-for-tat tariffs, including Trump’s decision to slap duties on Chinese imports worth nearly US$250 billion, growth was spluttering.
Still, finding a compromise has become a priority for President Xi Jinping’s administration amid reports that Beijing has delivered a written response to US demands for wide-ranging trade reforms.
The move comes just weeks before Trump and Xi are due to hold a mini-summit on the sidelines of the G20 meeting in Buenos Aires.
“Momentum is gaining for easing tensions between China and the US,” the state-owned Global Times, which is run by the ruling Communist Party’s mouthpiece, the People’s Daily, pointed out in an editorial.
“During the process, Beijing and Washington should push for practical results and make actual progress in fields like economy, trade and military relations. It would boost mutual confidence in solving disputes through communication,” it added.
The acid test, of course, will come in Argentina after the talks between the two presidents. Only then will we find out if Beijing and Washington are really an ocean apart when it comes to “solving” their economic and trading differences.