A blow to Chinese exports. Trump’s tariffs have begun to work
Chinese exports unexpectedly fell in October. Tariffs and tensions with the US are weighing on results, and domestic demand remains weak.
Exports from China decreased by 1.1% in October. year on year, which is the weakest result since February. This is a surprise after the September increase of 8.3%. and contrary to the forecast assuming another +3%. – reports Reuters. The result was influenced by the high base from a year ago, when Chinese factories massively shipped goods to major markets, wanting to anticipate the effects of the tariffs announced by President Donald Trump.
Economic collapse
The biggest decline concerned exchange with the USA: shipments to the United States dropped by as much as 25.17%. year to year. At the same time, deliveries to the European Union increased by 0.9% and to ASEAN economies by 8.9%, which, however, did not compensate for the scale of the decline on the American market. Economists estimate that the loss of the USA reduced the dynamics of all exports by approximately 2 percentage points, which translates into approximately 0.3 percent. GDP.
Woei Chen Ho from UOB Singapore explains that the result was a mix of geopolitical uncertainty and technical factors, including a higher number of holidays in the comparable period. In her opinion, if the trade truce is maintained, the prospects may stabilize in the near future. In the longer term, however, it is expected that supply chains will continue to be moved outside China and the mutual dependence of Beijing and Washington will be consistently reduced, which will reduce the US share in Chinese exports.
Domestic demand
Domestic demand also looks weak. Imports increased by only 1.0%. year on year – this is the slowest pace in five months. In September, purchases from abroad grew by 7.4 percent, and the consensus for October indicated 3.2 percent. In response, the CPC Central Committee announced measures to “significantly” increase the share of household consumption in GDP over the next five years.
China’s trade surplus in October was $90.07 billion, slightly below September’s $90.45 billion. and lower than market expectations ($95.6 billion). The data fueled investor concerns about the broader impact of deteriorating trade relations with the US on the world’s second-largest economy, especially in a situation where domestic demand is also weakening.
