Despite the growing trade war with the US, Chinese exports showed their resilience in April, growing by 12.9% year on year.
This followed a surprise dip in March and was above most analysts’ expectations. Imports grew from 14.4% to 21.5%, also beating most forecasts.
All in, the Chinese trade balance is sitting at a healthy surplus of Rmb182.2bn, while the surplus with the US remains close to an all-time high, despite demands from US President Donald Trump to shave US$200bn off the deficit.
“The trade surplus with the US, China’s largest export market, widened to US$22.19bn in April from US$15.43bn in March,” says Rida Husna of Trading Economics.
Outbound shipments of aluminium were 451,000 tonnes in April, a slight increase on March’s data, while the sales of steel products grew from 5.65 million tonnes in March to 6.48 million tonnes. These are two of the products which have been in the crosshairs of the Trump administration. The fact that Chinese exports of the two metals are growing suggests that the tariffs are missing their target.
Some analysts have warned, however, that the overall momentum for Chinese exports has slowed. March’s dip suggests that they are not immune to lower overseas demand, even if China’s domestic consumption remains healthy.
After failing to make a breakthrough on trade talks, officials from the US and China are set to resume negotiations next week, when Lui He, China’s vice-premier and top economic adviser, visits Washington, DC.
“The upshot is that the backdrop of the ongoing trade negotiations between China and the US is one in which global growth has already peaked and China’s export performance is waning as a result,” Capital Economics’ China analyst Julian Evans Pritchard writes in a note. “And while softer foreign demand is largely being offset by domestic strength for now, the headwinds to growth from slower credit creation look set to increase and officials have started to sound less confident on the outlook for this year. This will hopefully encourage them to adopt a pragmatic approach to trade negotiations in order to try to avoid the imposition of tariffs and an even sharper slowdown in export growth.”
As well as demands to slash the US trade deficit by US$200bn, Trump is calling on China to remove tariffs and eliminate subsidies on advanced technologies. China, meanwhile, is hoping that the US will retract a ban on US companies selling parts to ZTE Corp, the Chinese tech giant.
On the sidelines of the Asian Development Bank (ADB)’s annual meeting in Manila on May 4, meanwhile, Asia’s other exporting powers warned against protectionism. The finance ministers and central bank governors of East and Southeast Asian nations pledged to work together to mitigate the effects of the trade war.
In a statement, officials from the Asean group of nations plus China, Japan and South Korea said: “The ministers and governors of Asean-plus three have promised to strengthen the economy and financial stability in the region. They’ve vowed to work together to increase security in the financial sector and support international trade policy.”