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China’s exports have declined for the first time since the US unleashed its “liberation day” tariffs in April, highlighting the impact of months of trade tensions even as the two powers struck a truce.
Exports from the world’s second-biggest economy were down 1.1 per cent year-on-year in dollar terms in October, China customs data showed on Friday. The last time they fell was in February.
The unexpected decline comes after months of strong export growth, including an 8.3 per cent rise in September. Analysts polled by Reuters had expected a 3 per cent increase last month.
China’s economy has relied heavily on external trade to counter the effects of a four-year property slowdown and weak consumer confidence at home, even in the face of escalating trade tensions with the US this year.
Last week President Trump and President Xi Jinping secured a one-year truce. Tensions had in recent weeks escalated over Beijing’s rare earths controls.
After the US and China hit each other’s economies with swingeing tariffs in April, subsequent trade truces incentivised exporters to frontload their shipments ahead of any further escalation.
China’s exports to the US have fallen over recent months but they have typically been balanced by rising shipments to south-east Asia, as well as Europe.
In October exports to both regions rose at a slower pace, with those to the EU edging 0.9 per cent higher year-on-year and those to south-east Asia adding 11 per cent, the smallest rise since February. US exports dropped 25 per cent in October.
Imports grew 1 per cent in October, also well below both September’s level of 7.4 per cent and analyst expectations of 3.2 per cent.
“Trade data tends to be very volatile, but I would say exports are the biggest surprise this year, so far [it] has been very strong,” said Larry Hu, chief China economist at Macquarie. “My base case is it’s going to remain very strong in the next 6-12 months.”
