Daily Management Review

Chinese exporters notice lack of demand


The US protective duties, imposed on supplies from China in the amount of more than $ 250 billion, have finally affected the volume of Chinese exports. In December it decreased by 4.4% year-on-year. This is the lowest growth rate over the past two years (in November, the dynamics were positive - 5.4%).

Public Domain Pictures
Public Domain Pictures
Exports to the United States fell 3.8%. Back in November, the growth of this indicator was 9.8%, but that surge was mainly due to the acceleration of purchases in front of the expected increase in duties from January 1. Recall that after the personal meeting of Donald Trump and PRC Chairman Xi Jinping at the G20 in early December, this deadline was postponed to March 1. By this time, the parties must agree on lists of concessions, and it is not yet known how the past first round of negotiations ended. Note that imports to the PRC declined even more than exports — by 7.6% (against 3% in November). In part, this is a consequence of lower prices for raw materials, including coal and oil, but the volume of high-tech goods imports decreased more than expected - by 14.9%.

In general, in 2018, China's exports grew by 9.9%, imports - by 15.8%, the trade surplus amounted to $ 351.8 billion, which is significantly less than in 2017 ($ 509.7 billion). The import of soybeans in China - this is one of the key articles of American exports to the PRC - fell for the first time since 2011.

As Capital Economics noted, US tariffs are not the only reason for the decline in trade turnover. China's deliveries to other countries also decreased. This is confirmed by surveys whose respondents indicate a weakening of global demand. Therefore, even if China and the United States manage to make a deal, the growth rate of Chinese exports will remain weak. Import growth is also likely to be limited due to weaker domestic demand amid slowing lending. ING Bank indicates that the decline is primarily related to the supply of electronics. It may continue in 2019, including due to the fact that foreign companies are beginning to abandon the use of Chinese components.

source: capitaleconomics.com