Chinese exports fell for a third successive month in October while imports remained weak as a resolution of the US-China trade war remained out of reach.
Exports dipped 0.9 per cent in US dollar terms, according to China’s General Administration of Customs, coming in below the 3.9 per cent fall forecast in a Reuters poll. Outbound shipments had slipped 3.2 per cent in September.
Imports dropped 6.4 per cent, the sixth consecutive decrease, but a slight improvement on the 8.5 per cent fall a month earlier. Economists had forecast an 8.9 per cent drop.
China said on Thursday it had agreed to remove some tariffs, suggesting the world’s two largest economies were moving closer to a trade war truce. The commerce ministry said negotiators had agreed to remove some tariffs “in phases”.
The Financial Times reported this week that the US was considering dropping 15 per cent levies on $112bn of Chinese imports introduced in September as a concession to China.
A meeting planned for this month between US President Donald Trump and his Chinese counterpart Xi Jinping was scrapped after civil unrest in Chile forced the cancellation the Asia-Pacific Economic Cooperation summit. The two leaders were set to sign what Mr Trump called a “phase one” agreement on the sidelines of the summit.
China’s commerce ministry had previously said trade tensions would only end when all additional tariffs on the country’s goods were lifted.
Martin Rasmussen, China economist with Capital Economics, said that even if a “phase one deal” was signed, headwinds for exporters would remain, especially when considering the recent strengthening of the renminbi. “The exchange rate will act as less of a prop to outbound shipments,” Mr Rasmussen said.
The onshore renminbi has gained 0.8 per cent for the week and the strengthened through the seven to the dollar mark earlier on Tuesday.
Cooling domestic demand would limit recovery in import growth, according to Capital Economics. Raymond Yeung, ANZ chief economist for greater China, said a permanent transformation of global supply chains was under way.
“Although the US-China ‘phase one’ deal has put the tariff war on hold, the rising trends of nationalism and protectionism will continue to drive the economic decoupling of the world’s two largest economies,” Mr Yeung said.
Trade Secrets is the FT’s must-read daily briefing on the changing face of international trade and globalisation.
Sign up here to understand which countries, companies and technologies are shaping the new global economy