More definite signs that China’s trade war with the US and slowing global economic growth are starting to have a growing impact on its exports, judging by the country’s November trade report, released on the weekend.
Export growth slowed noticeably while import growth slowed even more sharply, according to the report from China’s Customs Administration.
November exports rose 5.4% from a year earlier, and down sharply from the 15.6% rate in October. Chinese customs data showed it was the weakest performance since a 3% contraction in March in the wake of the usual disruption caused by the timing of the Lunar New Year.
Exports had risen 15.6% in October from a year earlier, so the slowdown in November was substantial and across the board.
Exports to the United States rose 9.8% in November from the same month in 2017, slowing from a 13.2% rise in October. Shipments to the EU rose 6%, down from 14.6% in October, while exports to South Africa dipped after a 7.7% rise in October.
Analysts said that slowing global demand seems to be outweighing the continuing higher than forecast exports to the US ahead of the threatened start of higher tariffs from January 1.
Those higher tariffs have been postponed for three months, but the terms of that agreement between Donald Trump and China’s President Xi remain ill-defined and hazy – which helped send Wall Street sharply lower on Friday.
But from Australia’s point of view, it was the larger than expected slowing in import growth that poses big questions about the health of our biggest export market.
Growth in imports for November slowed to just 3% last month from that very large rise of 21.4% in October. Analysts had forecast a rise of 14.5%.
Imports of iron ore tumbled (see separate story), but imports of LNG held up, even as prices have eased from growing oversupply.
Economists wonder if this is the first sign of the impact the slowing pace of growth in Europe and other markets, and more importantly weaker domestic demand.
Some analysts see the Chinese government now increasing efforts to aid the slowing economy.
China has eased reserve asset ratio for Chinese banks four times this year to pump more money into the economy for lending to small and medium-sized companies, and while another could come this week, some economists wonder if an interest rate cut might be around the corner.
One could come next weekend if the data on Chinese production, urban investment and/or retail sales are weaker than forecast.
While it would take a while to have an impact, a rate cut might be symbolic of the government’s push to maintain growth.
Despite the slide in export growth, China’s overall surplus was $US44.74 billion for November, compared with forecasts of $US34 billion and October’s surplus of $US34.02 billion
And of that higher deficit, China’s trade surplus with the United States made up most of it, widening to $US35.55 billion in November from $US31.78 billion in October.
For January-November, China’s trade surplus with the United States was $US293.52 billion, compared with about $US251.26 billion in the same period last year.
That clearly shows that Chinese exporters have stepped up shipments to the US ahead of tariff changes, even knowing that would continue to inflame the sensitivities of President Trump and his gang of China hawks.
And China’s foreign exchange reserves rose by $US8.6 billion month-on-month in November after three months of declines, influenced in part by rising bond prices in some major countries.
By the end of last month, foreign exchange reserves stood at $US3.06 trillion, a net drop of $US78 billion since the end of 2017, the country’s central bank said.
Last month’s increase was a result not only of the higher bond prices but also a strengthened US dollar, Wang Chunying, a spokeswoman for the State Administration of Foreign Exchange, said on Friday.
