Update: China Exports, Imports Decline Further in September
China’s exports and imports both contracted further in September, official data showed Monday. Economists pointed to U.S. tariff hikes and sluggish domestic demand as the reasons for the decline.
In dollar terms, goods exports declined 3.2% year-on-year to $218.1 billion last month, according to data (link in Chinese) released by the General Administration of Customs. The reading was worse than both the median forecast of a 2.8% decline by a Caixin poll of economists, and August’s 1% drop.
The main contributor to September’s fall in China’s outbound shipments was exports to the U.S., which were significantly weighed on by higher tariffs and the high comparison base from last year due to front-loading activities, economists with Nomura International (Hong Kong) Ltd. said in a note. From Sept. 1, the U.S. government began to levy an additional 15% tariff on more than $100 billion worth of Chinese goods. Previously, the U.S. had imposed additional levies on $250 billion in imports from China.
In September, China’s imports fell 8.5% to $178.5 billion year-on-year, also behind both the Caixin forecast of a 4.6% decrease and August’s 5.6% decline. This equaled May’s decline, meaning the two months jointly saw the steepest drops this year. Economists from Capital Economics said that suggests “domestic demand may not have picked up as much last month as the improvement in the manufacturing PMIs had indicated.”
The Caixin China General Manufacturing Purchasing Managers’ Index (PMI), which gives a snapshot of the manufacturing sector, rose to 51.4 in September from 50.4 the month before, the highest reading since February 2018. China’s official manufacturing PMI, released by the National Bureau of Statistics, rose to 49.8 in September from August’s 49.5
China’s trade surplus rose to $39.7 billion in September from $34.8 billion the previous month, after shrinking for two months in a row.
China’s goods exports to the U.S. were worth $36.5 billion (link in Chinese) in September, down from $37.3 billion (link in Chinese) in the previous month, customs data shows. Imports from the U.S. rose slightly to $10.6 billion last month from $10.3 billion in August.
“Exports look set to remain subdued in the coming quarters as any prop from a weaker renminbi should be overshadowed by U.S. tariffs and a further slowdown in global growth,” the Capital Economics economists said. “A partial rebound in headline import growth is likely before long, but cooling domestic demand means we don’t anticipate a strong rebound.”
The trade deal on Friday indicated that China will import more U.S. agricultural products. U.S. President Donald Trump said the deal includes as much as $40 billion to $50 billion in Chinese purchases and other commitments. In exchange, the U.S. agreed to call off Tuesday’s scheduled increase of tariffs on $250 billion of Chinese goods to 30% from 25%, which analysts say may have a marginal impact on export growth.
Economists from both Nomura International and Moody’s Investors Service expect uncertainty over the shape of a final deal to continue as both sides still have fundamental disagreements.
Contact reporter Guo Yingzhe (email@example.com)
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