Export dip underlines China’s economic woes

Squeezed by the trade war with the United States, China’s economy has continued to slide.

Exports suffered their third month of decline in October, and while the drop was less than expected, there were warnings of more pain to come.

Even though tensions between the world’s top leading economies appear to be easing, Beijing is struggling to get the growth engines firing as demand for its goods slows.

In the latest sign of weakness, official data showed overseas shipments fell 0.9% year-on-year last month, although that was much slower than the 3.2% drop seen in September.

“Looking ahead, we think that subdued global growth will continue to weigh on exports,” Martin Rasmussen, the China economist at Capital Economics, wrote in a note on Friday.

To compound the misery, the General Administration of Customs reported that imports sank for the sixth straight month in October, dropping 6.4%. Still, that was a slight improvement on the previous month.

Washington and Beijing have been embroiled in a bruising trade battle for 18 months, with punitive tariffs slapped on two-way trade worth hundreds of billions of dollars.

“This headwind is unlikely to be fully offset by the partial tariff rollbacks that are being proposed as part of the ‘phase one’ trade deal, especially given that the recent appreciation of the renminbi in anticipation of a deal means that the exchange rate will act as less of a prop to outbound shipments,” Rasmussen added.

But key statistics showed that China’s trade surplus with the United States, a massive bone of contention in the row, jumped to US$26.42 billion in October.

Overall, the global surplus was $42.81 billion. Yet it will be the first figure that will raise more than a few eyebrows.

Washington and Beijing have been embroiled in a bruising trade battle for 18 months, with punitive tariffs slapped on two-way trade worth hundreds of billions of dollars.

But markets have been buoyed this week by expectations of an interim trade deal.

Hopes for an end to the stand-off were boosted on Thursday when China announced that the two sides had agreed a plan to remove tariffs imposed on goods in stages if the phase one pact was signed off.

Even so, there might be no quick fix for China’s stuttering economy with the fallout hitting global growth.

“Slowing global growth and the uncertainty surrounding the US-China trade tensions will continue to dampen trade prospects in China and demand for imports,” Tommy Wu, of Oxford Economics, a research company, said.

– additional reporting AFP