Far from being impacted by the trade war with Donald Trump’s US administration, China has reported better-than-expected exports and imports for October.
In fact the weaker Yuan seems to have had as much impact on the monthly trade figures – on the import side which jumped by more than a fifth for the second time in three months, while the slide in the value of the currency gave exporters the scope to cut prices to maintain sales and share in key markets.
The country’s General Administration of Customs reported on Thursday that exports jumped 15.6% from October 2017, topping both the 14.5% growth reported for September and the 11% market forecast.
Imports meanwhile surged 21.4%, also topping September’s 14.3% and the market estimate of 14%.
China’s overall trade surplus was $US34.01 billion for October, lower than the $US35 billion economists had expected and roughly equal to the $34.13 billion reported for September. It was also more than August’s figure of just over $US31 billion.
Exports to the US jumped 13%, despite higher tariffs. Imports from the US contracted by 1.8% last month as Chinese buyers switched from the US as a major source for soybeans and a source for oil imports and LNG. This switching has been in reaction to Trump’s tariffs.
Analysts claimed for yet another month that part of the explanation for strong exports to the US is front-loading of shipments in anticipation of Mr. Trump’s threat to raise tariff rates on $200 billion worth of Chinese goods to 25% from the current 10% in January if no deal is reached.
That was part of the explanation in May, June, July, August, and September for stronger exports, especially to the US.
While that is an undoubted factor, the strength of the US economy, the weakness of the yuan and the ability it gives Chinese exporters to cut prices to compensate for tariffs and other charges are being underestimated by some analysts. The strength of the US dollar has made imports from all sources cheaper this year, and that can’t be ignored either. China’s currency is down 5.7% against the US dollar and just 2.7% on a trade-weighted basis.
