China October exports surprisingly strong in race to beat higher US tariffs
China reported stronger-than-expected exports for October as shippers rushed goods to the United States, its biggest trading partner, racing to beat higher tariff rates due to kick in at the start of next year.
Import growth also defied forecasts for a slowdown, suggesting Beijing’s growth-boosting measures to support the cooling economy may be slowly starting to make themselves felt.
The upbeat trade readings from China offer good news for both those worried about global demand and for the country’s policymakers after the economy logged its weakest growth since the global financial crisis in the third quarter.
October was the first full month after the latest US tariffs on Chinese goods went into effect on Sept. 24, in a significant escalation in the tit-for-tat trade battle.
But analysts continue to warn of the risk of a sharp drop in US demand for Chinese goods early in 2019, with all eyes now on whether presidents Donald Trump and Xi Jinping can make any breakthroughs on trade when they meet later this month.
China’s exports rose 15.6 percent last month from a year earlier, customs data showed on Thursday, picking up from September’s 14.5 percent and beating analysts’ forecasts for a modest slowdown to 11 percent.
“The strong export growth in October was buoyed by front-loading activities by exporters...,” said Iris Pang, Greater China Economist at ING in Hong Kong, noting the month is traditionally quieter due to long holidays.
“We expect exports to remain strong towards the end of the year as businesses are afraid of a failure in the Trump-Xi meeting, which could lead to broader tariffs on more Chinese goods from the US,” Pang said.
Washington has vowed to hike the tariff from 10 percent to 25 percent at the turn of the year, while Trump has warned that if talks with Xi are not productive, he could quickly slap tariffs on another $267 billion in Chinese imports.
Despite several rounds of US duties this year, China’s exports have been surprisingly resilient as firms ramped up shipments before even tougher measures went into effect.
Container ship rates from China to the US West Coast remain near record highs, suggesting shipments will remain solid well into November and possibly early December. China’s exports to the US rose 13.2 percent from a year earlier in October.
In another positive sign, China’s exports by volume also showed solid growth, according to Oxford Economics, which estimated they rose “an impressive” 9.9 percent.
But analysts say robust export readings won’t last much longer, noting Chinese factory surveys have been showing contracting export orders for months.
US orders for Chinese goods at the latest Canton fair dropped 30.3 percent from a year earlier by value, as higher US tariffs made goods from batteries to farm tractors more expensive.