Fri, Aug 09, 2019 - Page 10 News List

China’s exports return to growth in Q2

ASEAN GAIN:Exports to the US continued to shrink, but increased to Taiwan, Europe, South Korea and Southeast Asia, possibly because exporters sought diversification

Reuters, BEIJING

China’s exports unexpectedly returned to growth last month on improved global demand, despite escalating US trade pressure, but the rebound might be short-lived as Washington prepares to slap even more tariffs on Chinese goods.

Analysts say a sharp drop in the yuan currency this week might offer only limited help for Chinese exporters, who are facing additional US levies next month, shrinking profit margins and sputtering demand worldwide.

Exports last month rose 3.3 percent from a year earlier, the fastest since March and more than the most optimistic estimate in a Reuters poll, customs data showed yesterday.

Analysts had expected a 2.0 percent drop after June’s 1.3 percent fall.

However, imports remained weak, declining 5.6 percent and highlighting sluggish domestic demand as China’s economy struggles to get back on firmer footing. Still, the drop was less than an expected 8.3 percent and June’s 7.3 percent.

While China’s exports to the US continued to shrink last month in the face of stiffer tariffs, shipments picked up to Taiwan, Europe, South Korea and, most noticeably, ASEAN.

“It could suggest that some exporters are trying to diversify their export regions, it could also be due to manufacturers’ relocations to ASEAN [from China],” Australia and New Zealand Banking Group Ltd senior China economist Betty Wang (王蕊) said.

“This hopefully can offset some of the downside risks from the US-China bilateral trade,” Wang said.

Washington is clearly watching shifts in China’s trade patterns as the trade dispute wears on. The US recently warned Hanoi that some export goods labeled “Made in Vietnam” were of Chinese origin.

An official Chinese think tank attributed the rise in exports partly to Beijing’s Belt and Road initiative, a program that aims to boost business and trade ties with dozens of countries around the world.

“This year, China did not only increase its market share in major economies like the European Union, what’s more outstanding is the growth rate in emerging markets is very clear, especially the countries who we work with on Belt and Road,” said Yan Min (閆敏), director of the forecasting department at the Chinese State Information Center, state media reported.

China’s trade surplus with the US stood at US$27.97 billion last month, narrowing from June’s US$29.92 billion.

It reached $168.5 billion in the first seven months of this year, highlighting continued imbalances, which have been a core complaint of US President Donald Trump in his administration’s negotiations with Beijing.

China’s exports last month to the US fell 6.5 percent year-on-year, while imports from the US slumped 19.1 percent.

“Looking ahead, exports still look set to remain subdued in the coming quarters as any prop from a weaker renminbi should be overshadowed by further US tariffs and broader external weakness,” Julian Evans-Pritchard, senior China Economist at Capital Economics, said in a note yesterday.

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