China’s exports unexpectedly fell last month as global demand waned and a deal with the US continued to elude negotiators, while imports rebounded.
Exports dropped 1.1 percent in US dollar terms from a year earlier, while imports rose 0.3 percent, the customs administration said yesterday. That left a trade surplus of US$38.73 billion for the month.
Economists had forecast that exports would rise 0.8 percent while imports would drop by 1.4 percent.
The numbers are a bit surprising as exports unexpectedly fell while imports returned to growth, Singapore-based Commerzbank AG senior emerging markets economist Zhou Hao (周浩) said.
Overall these are still soft numbers — there might be some further import improvement this month due to a favorable comparison with low numbers last year, but in general there is hardly a meaningful improvement in sight.
Imports from the US rose for the first time since August last year, while exports continued their slide for a 12th month, dropping 23 percent. However, the value of imports last year was depressed by the trade war so the increase this year is off a low base. China’s trade surplus with the US stood at US$24.60 billion last month, easing from the previous month’s surplus of US$26.45 billion.
Chinese and US negotiators are moving closer to an agreement despite sharp rhetoric and diplomatic spats over Xinjiang and Hong Kong. US negotiators expect a phase one deal to be completed before the Dec. 15 deadline when new US tariffs on Chinese goods are scheduled to take effect, according to people familiar with the matter.
“If a phase one trade deal is struck and there is no further escalation of US-China trade tensions, the drag on China’s exports from higher US tariffs will likely ease through 2020. Domestic business and consumer sentiment will also improve slightly, supporting investment and consumption, although trade-related uncertainty will likely remain elevated in the short term,” Sylvia Sheng (盛楠) global multi-asset strategist at JPMorgan Asset Management in Hong Kong, wrote in a recent note.
Senior Chinese officials are to meet in the coming days to set economic policy for next year, including the growth target and plans for monetary and fiscal settings.
The soft rebound in imports shows the weakness of the domestic economy.
The government has brought forward the sale of some debt so it can start spending the money as early as possible next year, but People’s Bank of China Governor Yi Gang (易綱) indicated that the nation’s monetary policy will continue to refrain from large-scale easing steps.
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