China in export push before US tariffs kick in
Trade surplus with the world’s largest economy hits $258.15 billion for the first 10 months of the year
Looming tariffs are forcing China to put its export machine into overdrive amid rising trade tensions with the United States. Latest data released by the General Administration of Customs have illustrated a hive of activity.
Last month, Chinese exporters rushed to flood the US market with goods and products before higher duty rates kick in at the start of next year.
In October, the trade surplus between the world’s second-largest economy and the United States was US$31.78 billion, which was down from the record high of $34.13 billion in September.
But for the first 10 months of the year, it was a whopping $258.15 billion compared with $222.98 billion during the same period in 2017.
“Exporters are [front-loading] the expected tariff increase to 25% in January,” Iris Pang, the Greater China economist with global Bank ING in Hong Kong, told Bloomberg. “This phenomenon [will] last into November and December.”
The shipments race has gathered pace since US President Donald Trump announced plans in the summer to increase tariffs on goods and products worth $250 billion with the threat of more duties on virtually all of China’s imports into the US.
‘We’re going to see these two sides continue to dig in their heels – both sides still think they have the upper hand’
Still, all eyes were on the export stats to the US with China’s economy cooling. In the third quarter, GDP growth came in at a healthy 6.5% but still fell to levels not seen since the 2009 Great Recession.
Earlier this week, the service sector showed signs of distress with the pace of growth decelerating. Factory activity has also been hit while latest data on consumer confidence dipped, CEIC, a global market intelligence firm, reported. Moreover, external pressure from the trade conflict has fueled growing concerns. Even the planned meeting between President Xi Jinping and Trump at the Group of 20 Summit in Buenos Aires later this month has failed to ease fears.
“We’re going to see these two sides continue to dig in their heels – both sides still think they have the upper hand,” said Scott Kennedy, the deputy director of China studies at the Center for Strategic and International Studies, a Washington think-tank.
Pang at ING was just as gloomy and felt there was only a slim chance of a long-term deal.
“We do not expect the sideline meeting of Xi and Trump [will] be positive,” she said. “We just hope that the meeting won’t create further damage to the trade relationship.”
A sentiment shared by the rest of the global business community.