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Sino File | US-China trade war: gloomy exports give Beijing 3 reasons to worry
- The latest figures confirm the worst fears of China’s policymakers as Trump’s tariffs take hold, trade with the US deteriorates and domestic sentiment weakens
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The dramatic and sharp contraction of China’s exports and imports last month has not only confirmed the downward trend of the Chinese economy, but also further raised the risks to its growth prospects amid the uncertainty over a possible full-blown trade war.
China’s export growth in US dollar terms tumbled 4.4 per cent year on year in December, from 3.9 per cent growth in November and 14.3 per cent the month before. Meanwhile, imports fell 7.6 per cent from 2.9 per cent growth in November and 20.3 per cent in October.
The December data, released on Monday, has confirmed the worst fears of China’s policymakers – as well as investors in China-related assets – in at least three ways.
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Firstly, it provided the first clear evidence of how US President Donald Trump’s punitive tariff measures are starting to bite. Shipments to the United States in particular worsened as a result of the tariffs. Export growth to the US fell by 3.5 per cent year on year in December from 9.8 per cent growth in November, significantly below the average growth of 12.9 per cent in the first 11 months of 2018. The sharp contraction in China’s exports to the US suggests that front-loading is almost over.
The higher tariffs China levied on US supplies also hit overall import growth. Imports from the US were down 35.8 per cent year on year in December compared to a fall of 25 per cent in November. Soybeans, China’s second-largest American import, fell last year for the first time since 2011.
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