Fallout from the trade war with the United States has dealt another blow to China’s slowing economy.
Imports and exports fell more than expected last month, official data published by the General Administration of Customs on Monday revealed.
Globally, exports from the world’s second-largest economy dropped 3.2% in September from the same period last year while imports dived 8.5%.
The figures were worse than expected and were released just days after a “mini trade deal” between China and the US was agreed at the end of last week.
“The mini US-China trade deal reached on Friday doesn’t alter the outlook significantly,” Martin Lynge Rasmussen, a China economist at consultancy Capital Economics, said in a note.
“Looking ahead, exports look set to remain subdued in the coming quarters. Meanwhile, import growth has slowed sharply in recent quarters and now looks unusually weak relative to economic growth. A partial rebound in headline import growth is therefore likely in the near term,” he added.
To illustrate the impact of the 15-month long dispute, the European Union has now replaced the US as China’s top trading partner amid a bruising tariffs conflict.
Engulfed in an impeachment inquiry, US President Donald Trump heralded the deal as a major breakthrough.
Imports from the US plunged by 26.4% last month compared to the same period in 2018. The trade surplus with China also narrowed 3.9% to US$25.8 billion in September from $26.9 billion in August.
On Friday, a shaft of light did appear to pierce the gloom when China promised to increase US agricultural purchases in a partial Sino-US agreement, which also includes safeguards for intellectual property rights and a further opening up of financial markets.
Engulfed in an impeachment inquiry, US President Donald Trump heralded the deal as a major breakthrough.
But it may only offer a temporary tariff reprieve because it lacks specifics and leaves the thorny issues such as unfair state subsidies until future negotiations.
“The external environment facing China’s foreign trade development is still complicated and severe. Instability and uncertainty are increasing,” Li Kuiwen, a spokesman for the General Administration of Customs, told a media briefing.
So far, Washington and Beijing have imposed punitive tariffs covering more than $360 billion worth of goods in two-way trade.
This, in turn, has slowed the world’s two largest economies.
For China, the downturn has continued across a broad range of sectors, from retail sales to industrial output, which plunged to a 17-year low in August. Big-ticket items such as new car sales have stalled while residential property prices have also suffered as consumer debt increased.
Last week, figures showed that the services sector grew at its slowest pace in seven months in September. The Caixin/Markit PMI fell to 51.3, the weakest since February, compared to 52 in August. But it still stayed above the 50-point mark, which separates expansion from contraction.
“China’s economy showed signs of marginal recovery in September,” Zhong Zhengsheng, the director of macroeconomic analysis at CEBM Group, said in a statement. “However, the rising costs of labor and raw materials restrained business confidence.”
– additional reporting AFP