- Today, China released its November trade data. The data has assumed even greater significance amid the US-China trade war and China’s slowdown concerns.
- The data was a mixed bag overall. While China’s November imports were better than expected, its exports missed economists’ estimates. So, what does China’s November trade data tell us about the trade war and China’s slowdown? We’ll explore this now.
China November trade data: Domestic slowdown and imports
Today, China released its November trade data. The country’s imports, in US dollar terms, rose 0.3% YoY (year-over-year). Analysts polled by Reuters expected China’s November imports to fall 1.8%. However, China’s November exports fell 1.1% YoY, whereas analysts were expecting the country’s exports to rise by 1.0%. In October, China’s exports fell by 0.9% while its imports tumbled 6.4%.
Notably, China’s imports have been quite weak this year. According to China’s trade data, including November, China’s imports have risen YoY for only two months this year. Weak imports signal a slowdown in China’s domestic economy. That said, this month, China’s economic indicators show that the economy might be bottoming out. The country’s manufacturing PMI surveys showed an expansion in its November manufacturing activity.
China exports tumble: Trump’s tariffs are hurting
China’s exports have now fallen on a yearly basis in every month since August. Notably, the US-China trade war escalated in August and both countries announced new rounds of tariffs. The next round of China tariffs is scheduled for December 15.
However, the general assumption is that Trump will delay this round of tariffs amid ongoing discussions of phase one in the trade deal. Incidentally, on previous tariff deadlines, there was a spike in China’s exports to the US as companies ordered in advance to escape the tariffs. There was no such spike last month as China’s November trade data shows.
Meanwhile, Trump’s tariffs badly hit China’s export engine. According to the South China Market Post, China’s exports to the US fell 12.5% year-to-date. Also, US exports to China fell a whopping 23.3% over the same period. However, while the percentage decline shows that the US is hurting more from the trade war, the absolute figures portray a different picture.
China’s trade surplus
It is worth noting that China runs a large trade surplus with the US. As a result, while, in percentage terms, US exports to China fell more, in absolute terms, the fall in Chinese exports to the US is more. As a result, China’s trade surplus with the US has narrowed. According to Reuters’s calculation based on China’s November trade data, last month China’s trade surplus with the US stood at $24.60 billion as compared to $26.45 billion in October.
Also, according to China’s trade data, China’s overall trade surplus narrowed last month as its imports fared better than exports. In November, China reported a trade surplus of $38.73 billion as compared to $42.81 billion in October. A US-China trade deal would help both countries increase their exports and imports to each other.
However, a trade deal would not be a magic wand for markets. Read US-China Trade War: There’s No Miracle Deal for more insights. Notably, several US companies, including Apple, are looking at alternate countries for their supply chains amid the US-China trade dispute.
China’s November trade data: Slowdown concerns and trade war
China’s November trade data tells us a couple of things. Firstly, talking about China’s slowdown, the economy is showing signs of bottoming out. Secondly, while the US-China trade war is hurting China’s exports to the US, it has impacted US exports as well. Furthermore, China’s exports to ASEAN (Association of Southeast Asian Nations) and Europe have been strong. It might also raise suspicion of transshipments from other countries to the US.
That said, amid the US-China trade war, China has been working to seal trade deals with other trading partners. Read Trump’s Trade War Turns Xi Jinping into a Statesman for more analysis.