Published: Wed, September 11, 2019

China's exports fall in August as United States trade war rumbles

China's exports fall in August as United States trade war rumbles

White House economic adviser Larry Kudlow said Friday the United States wants "near term" results from US-China trade talks in September and October but cautioned that the trade conflict could take years to resolve.

China's exports to the U.S. - its largest trading partner - fell 16 percent in August, compared to a year earlier to $44.4 billion and imports of USA products plummeted to 22 percent to $10.3 billion, the Associated Press reported on Sunday, citing United States customs data.

Beijing is expected to announce more support measures in the coming weeks to avert the risk of a sharper economic slowdown as the U.S. ratchets up trade pressure, including the first cuts in some key lending rates in four years.

On Friday last week, the Chinese central bank cut banks' reserve requirements for a seventh time since early previous year to free up more funds for lending.

The U.S. last week put into effect a 15-per-cent tariff on $112 billion worth of Chinese goods, including televisions, books, nappies and sports shoes.

China has allowed the yuan to decline below 7 a dollar, prompting the name it a currency manipulator.

Among its major trade partners, China's August exports to the United States fell 16% Y-Y slowing sharply from a decline of 6.5% in July. The steep drop suggests United States exporters are also suffering from the trade war between the world's two largest economies.

Investors were unsettled by a report officials were struggling to agree on a schedule.

In their latest escalation, Washington imposed 15 per cent tariffs on $US112 billion of Chinese imports and plans to hit another $160 billion on December 15.

China has imposed or announced penalties on an estimated $120 billion of USA imports.

Sunday's data also showed China's imports shrank for the 4th month running since April.

China's global trade surplus rose 25 per cent from a year earlier and exports to the European Union rose three per cent from a year earlier.

Sluggish domestic demand was likely the main factor in the decline, along with softening global commodity prices.

The weak growth represents a slowdown of 12.6 percentage points from that experienced by Chinese trade in the same month past year.

China's global exports fell 3 percent to $214.8 billion, while imports were up 1.7 percent at $180 billion. Analysts had forecast a surplus of US$43 billion.

The trade war further strains Beijing-Washington ties, already overshadowed by U.S. freedom of navigation exercises near Chinese-occupied islands in the disputed South China Sea, and USA support for self-ruled and democratic Taiwan, which China claims as its own. Beijing hit back with retaliatory levies, and let its yuan currency fall sharply to offset some of the tariff pressure.

The Chinese government has agreed to narrow its trade surplus with the USA but is reluctant to give up development strategies it sees as a path to prosperity and global influence.

But there was no indication that any planned tariffs on Chinese goods would be halted, and markets expect a lasting peace between the two countries seems more elusive than ever.

"Some cargoes from the United States did not get loaded earlier and only cleared customs in August", said Xie Huilan, analyst with industry portal before the data was released.

The governments agreed to meet again in September but that was postponed to October.

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