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October 15, 2019

China imports, exports down in September as growth cools


October 15, 2019

Beijing: China's imports and exports fell more than expected in September, official data showed Monday, as US tariffs and cooling demand at home and abroad hit trade in the world´s second largest economy.

Globally, China´s exports dropped 3.2 percent in September from the same period last year, while imports dived 8.5 percent, according to data from the customs administration. The figures were worse than a Bloomberg forecast, which estimated exports to drop 2.8 percent and imports fall 6.0 percent.

The US is now China´s third biggest trade partner -- after the European Union and the Southeast Asian trading bloc ASEAN -- with imports from the US down 26.4 percent on-year in September.

China promised to increase US agricultural purchases in a partial US-China deal announced Friday, which also includes protections for intellectual property and opening up financial markets.

Engulfed in an impeachment inquiry, US President Donald Trump heralded the deal as a major breakthrough. But it may only offer a temporary tariff reprieve because it lacks specifics and leaves the thorny issues such as unfair state subsidies to Chinese firms for later, analysts told AFP.

So far, the two sides have imposed punitive tariffs covering more than $360 billion worth of goods in two-way trade.

China´s trade surplus with the US narrowed 3.9 percent to $25.8 billion in September from $26.9 billion in August. "We believe that as Sino-US trade negotiations have made progress... and we expect further healthy development in bilateral trade," said Li Kuiwen, a spokesman for Chinese customs.

China´s total trade surplus in September was $39.65 billion. A major escalation in the trade war last month was "partly to blame" for the weak figures, said Julian Evans-Pritchard, of Capital Economics.

Washington imposed 15 percent tariffs on more than $125 billion in Chinese imports on September 1, and Beijing retaliated with its own fresh levies.

As a result, "the contraction in exports to the US deepened further, while shipments to the rest of the world held steady", Evans-Pritchard wrote in a research note. "With the mini US-China trade deal unlikely to alleviate the main headwinds facing exporters, it will take longer before growth in outbound shipments bottoms out."

Chinese imports, which declined for the fifth consecutive month amid cooling domestic demand, may also not see a strong recovery, he said. Pork imports, however, surged 43.6 percent on-year in September after an outbreak of African swine fever decimated pig supplies in the country.

On Friday, Trump played up the "substantial phase one" deal as a result of his hard-line stance with China. But it will take weeks to finalise and the details are not clear -- nor will it roll back tariffs already in place on hundreds of billions of dollars in two-way trade.

"The deal is still tentative and tensions between the US and China remain high," said Tommy Wu from Oxford economics. China´s state media also struck a cautionary tone and did not mention any "deal".

Meanwhile, US and Chinese officials will hold talks by phone this week and next as they work to finalize the "phase one" trade deal announced last week, US Treasury Secretary Steven Mnuchin said Monday.

President Donald Trump, beset with an impeachment inquiry and criticism over his foreign policy, on Friday hailed the breakthrough agreement, but said it would take several weeks to finalize the details before he signs a pact with Chinese leader Xi Jinping next month.

There are few specifics, nor does the deal roll back the tariffs already imposed on hundreds of billions of dollars in trade between the world´s two dominant economic powers. But Mnuchin indicated the next round of new tariffs due to hit consumers on December 15 could be scrapped once the deal is signed.

He pushed back on the skepticism about the agreement in an appearance on CNBC. "There is a fundamental agreement in principle," he said. "There are still some issues that need to be worked out in wording but I would say we have every expectation that phase one will close.

"So I would describe phase one as quite substantial." He said deputy-level officials will hold discussions by telephone this week, while he and US Trade Representative Robert Lighthizer will have a call with China´s trade envoy, Vice Premier Liu He, next week.

The senior officials will then meet in Santiago, Chile, on the sidelines of the APEC ministerial meeting, before the leaders summit where Trump and Xi are expected to sign the pact.

The initial deal, which finally breaks an 18-month trade spat, included a massive increase in China´s purchases of US farm products, and also covers intellectual property, financial services and currencies.

Mnuchin also said the sides had agreed on "real enforcement mechanisms" in case further disagreements arise between Washington and Beijing over the terms of the deal.