China Feels the Pain as Exports, Imports Shrink, Markets Collapse
$SOY, $USD, $UNG
China has reported weaker than expected November exports and imports, showing slower global and domestic demand and raising the likelihood that more measures to keep the country’s growth rate from slipping too much will be put in place.
November exports only rose 5.4% from a year earlier, Chinese customs data showed Saturday, the weakest performance since a 3% contraction in March, and well short of the 10% forecast in a Reuters poll.
Analysts say the export data showed that the “front-loading” impact as firms rushed out shipments to beat planned US tariff hikes faded, and that export growth is likely to slow further as demand cools.
The customs data showed that annual growth for exports to all of China’s major partners slowed significantly.
Exports to the United States rose 9.8% in November from a year earlier, compared with 13.2% in October.
To the EU, shipments increased 6.0%, compared with 14.6% in October. Exports to SKorea fell from a year earlier, while in October they rose 7.7%
Import growth was 3%, the slowest since October 2016, and a fraction of the 14.5% seen in the poll. Imports of iron ore fell for a 2nd time, reflecting waning restocking demand at steel-mills as profit margins narrow.
The sluggishness in imports and exports is in full swing. The soft imports show a significant pullback in domestic demand.
In recent months, Chinese exports had expanded robustly, which economists said reflected front-loading of cargoes before a now-postponed plan to hike US tariffs of $200-B of Chinese goods to 25% from 10% on 1 January.
The November trade numbers came out less than a week after Presidents Trump and Xi agreed to a 90-day truce delaying that tariff hike as they negotiate a trade deal.
November’s China numbers adds a real sense of urgency to complete the agreement
Friday, President Trump sounded an optimistic note about trade negotiations with China, as his top economic advisers downplayed friction from the arrest of Huawei’s CFO Meng Wanzhou.
“China talks are going very well,” President Trump Tweeted.
Now with US and China agreeing not to escalate trade tensions, China will start purchasing US agricultural goods, and LNG which may narrow China-US trade surplus in the future.
China’s November trade surplus with the United States was a record $35.55-B. But China’s imports from the US in November fell 25% from a year earlier, while the annual decline in October was only 1.8%.
Economists in recent months have figured in a deterioration in China’s export outlook in Y 2019, factoring in higher US tariffs on a wider range of Chinese goods.
Chinese policymakers are expected to offer more policy support and deliver more support measures if domestic and external conditions continue to deteriorate.
China’s central bank has cut the amount of cash that banks must hold as reserves 4X this year, as policymakers seek to steady the slowing economy amid the trade dispute with the United States.
The government aims for growth of around 6.5% this year, compared with Y 2017’s 6.9% pace.
Chinese stock markets are deep into Bear territory, off over 30% YTD, trillions of USD loses, painful.
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