Soybean buy buoys Chinese imports as Beijing tries to stave off trade war with US
China willing to increase imports to settle the trade disputes, but still concerned by changing US position, analyst says
China’s imports rose by more than a quarter last month as it bought more soybeans – a major American export – and sought to stave off a trade war with the United States.
Imports of US products were up 11.4 per cent in May from a year earlier to US$14.7 billion, the third consecutive month China has bought more American products, according to figures released by the General Administration of Customs on Friday.
China bought 9.7 million tonnes of soybeans, the biggest amount since July, helping push up imports overall by 26 per cent to US$187.9 billion. Overall, exports rose 12.6 per cent year on year to US$212.9 billion.
Larry Hu, chief China economist at Macquarie Capital, said that with the exception of soybeans, China had yet to aggressively increase its imports from the US.
But “we could see imports from the US accelerate in the coming months” under future bilateral trade arrangements, he said.
The prospect of an all-out trade war has waned in recent days, with Beijing and Washington softening their rhetoric and ceding some ground, according to analysts.
China’s US-bound merchandise exports rose 11.6 per cent year on year to US$39.3 billion last month, putting its trade surplus with the US at US$24.6 billion in May, slightly lower than China’s overall trade surplus of US$24.9 billion.
According to US data, China had a US$375 billion surplus with the US last year, but Beijing contends the surplus is about US$100 billion lower than that figure.
The imbalance is high on the agenda of US President Donald Trump, who has threatened 25 per cent tariffs on US$50 billion of Chinese goods – and more if it and other concerns about market access and intellectual property theft are not resolved.
Beijing and Washington have engaged in a series of trade talks to find an answer, with a third round in the Chinese capital last weekend. The negotiations have yet to yield any firm agreement but some interim deals are believed to be taking shape.
China has announced cuts to import duties on many consumers goods and promised to buy more from the US, while Washington has lifted sanctions against Chinese telecom equipment maker ZTE.
“The Chinese authority has made big concessions in the final settlement of the ZTE ban, which is a good start to solve other bilateral problems,” Iris Pang, chief Greater China economist at ING Bank in Hong Kong, said.
Julian Evans-Pritchard, a senior China Economist with Capital Economics, said the decision to let ZTE resume operations suggested the US and China were making progress towards a deal to avert imminent US tariffs.
“Progress in US-China trade negotiations raises hopes that a sharp downturn in [outbound] shipments can be avoided,” he wrote in a research note.
Beijing Normal University finance professor Zhong Wei said China was willing to increase imports to settle the trade disputes, offering some deals on energy and farm produce in the latest talks.
But the biggest concern for Beijing was still Washington’s frequent changes in position.
“There are different viewpoints within the US government,” Zhong said.
Commerce Ministry spokesman Gao Feng said on Thursday that the Chinese authorities did not want an escalation of trade tension.
Gao refused to confirm reports that Beijing already promised to import an extra US$70 billion in US agricultural and energy commodities. The figure is roughly in line with the previous US demand of narrowing the trade gap by US$200 billion in three years.
“Details of the China-US trade negotiations still await final confirmation of both parties,” Gao said.
Nevertheless, Beijing issued a warning after the third round of talks, saying any bilateral agreements would be scrapped if Washington went ahead with tariffs or other trade measures.