China's exports are slowing. The trade war will make things worse
economy's massive export engine is slowing down as the trade war heats up. A
new salvo from the United States could push it into reverse.
in Chinese exports weakened to just under 10% in August, down from more than
12% the previous month, according to government data published over the
weekend. The performance is significantly below China's average for the year so
The situation is likely to
worsen in the coming months as the trade war between China and the United States escalates.
President Donald Trump said Friday he's prepared to impose another huge wave of tariffs on $267
billion of Chinese products.
On top of tariffs already in
place or in the works, such a move would apply new taxes to the entire $505
billion of goods the United States imported from China last year.
As a result, China's export
growth "could tumble to low single digits and even negative territory in
coming months," analysts at investment bank Nomura wrote in a research
note. That would pile more pressure on an economy that is already battling serious
headwinds, they said.
The weakness in Chinese
trade is so far coming mainly from slowing growth in exports to big trading
partners like the European Union and Japan.
Exports to the United States actually rose to a record
high during August, helped by the fall in the Chinese currency against the US
dollar and the rush by companies to ship goods before the next round of tariffs
comes in, according to analysts.
China's huge trade
surplus with the United
States is at the heart of the dispute. The fact that it's still growing
"is likely to add to the friction" between the world's top two
economies, Louis Kuijs, head of Asia economics at research firm Oxford
Economics, said in a note to clients Monday.
Falling exports could pressure Beijing to find new
ways to juice economic growth, according to Nomura.
Chinese officials have
already turned to tax cuts, infrastructure spending and looser monetary policy
as they seek to prop up
The Chinese economy began
cooling off this year, and signs of stress are multiplying. Data last week
factories are losing export
orders and suffering fromweakening growth in infrastructure investment.
China's stock market and its currency have been pummeled in recent months by investors
concerned about the health of the country's economy.
But many analysts say they
doubt authorities will purposefully devalue the Chinese yuan against the dollar
in order to reignite export growth, as this could set off turmoil in financial
markets and send a flood of money pouring out of the country.