China: exports to the United States to the penalty in the midst of a trade war

Containers from China in the Port of Los Angeles on September 1, 2019 in Long Beach, CaliforniaMark RALSTON

As Beijing and Washington announce new trade talks, China on Sunday unveiled bleak figures for its foreign trade in August.

Exports of the Asian giant, one of the pillars of its economy, declined last year (-1.0%). However, they had resisted well in July (+ 3.3%) despite trade tensions with the United States.

Imports from China continued to decline in August (-5.6% year-on-year), unchanged from July, in a context of sluggish domestic demand.

On the backdrop of tighter trade tensions with Beijing, additional tariffs on billions of dollars worth of goods imported from China came into force on 1 September in the United States.

And by the end of the year, all US imports from the Asian giant (some $ 540 billion on the basis of 2018) will be overtaxed, with a final round of punitive tariffs scheduled for December 15.

China responded by increasing tariffs on $ 75 billion worth of US goods.

– "No agreement" –

Despite new mutual surcharges, Beijing and Washington ensure dialogue. Negotiators from both countries are scheduled to meet in early October in the United States.

During the last face-to-face negotiations in Shanghai in late July, the two countries agreed to meet again in September in the United States, without specifying a date, to try to find a way out of their trade war.

"We continue to think that no trade agreement will be concluded this year or even in 2020," said economist Tao Wang, of the UBS bank, quoted by Bloomberg.

On the contrary "we see the risk of further escalation of the trade war," she warns.

The trade dispute between China and the United States, started last year by the Trump administration, is now threatening the growth of the world's two largest economies and the rest of the world.

Chinese trade figures "need to be watched closely" because "they are a good barometer of the global economy," China being the largest trading nation in the world, said economist Ting Lu of Nomura Bank.

In total, the Chinese trade surplus melted in August to 34.83 billion dollars, against 44.58 billion the previous month.

With the United States alone, the surplus, followed closely by US President Donald Trump, declined slightly over this period to 26.95 billion dollars against 27.97 billion in July.

Exports to the European Union remained stable at $ 38.2 billion.

– Support to the economy –

Fearing a continuation of the commercial standoff between Beijing and Washington, several institutes have already revised downward in recent days the Asian giant's growth forecast for next year to less than 6% (against 6.6% in 2018) , which would be its slowest pace in almost 30 years.

Some companies domiciled in China are also many to consider relocating their production – or to do – in countries safe from surcharges US, especially in Vietnam.

Anxious to maintain social stability, in a sensitive year marked in particular by the 70th anniversary of Communist China on October 1, Beijing makes employment one of its priorities.

To facilitate access to credit for micro, small and medium-sized enterprises – the most dynamic in terms of employment – the Chinese Central Bank (PBOC) announced Friday a drop in deposits that banks are obliged to keep in their coffers.

The measure must inject more liquidity into the economy.

Already in July, Chinese Premier Li Keqiang called for increased support for export-oriented companies abroad and promised tax breaks.