Why Trump sanctions failing to control China’s growing exports?
Last updated on December 3rd, 2018
The US has recorded a second straight high in the 3rd quarter of 2018 with an increase from US31.1 billion in August, 2018 to US$34.1 in September, 2018 to close the quarter. This increase of US$3 billion, is beyond any doubt a sign of strength in the growing export industry.
China is not ready to slow down its exports either despite the Trump sanctions that has led to worsening trade environment. This was evident when in September this year, the trade gap between this two super powers hit a fresh high.
Economists observe that “a rush of shipments driven by fear of heavier tariffs, a softer domestic currency and solid external demand all spurred export growth”. Whether this trend will withstand the prevalent woes despite the current momentum is yet to be seen. Economists suggests that this momentum will not survive as the widening disputes will mostly likely find some intensity.
Despite Trump sanctions, going by the data of General Administration of Customs, total exports went up to 14.5% from what was seen about a year ago. This figure surpassed the 9.8% recorded in August and the 8.8% predicted by economists’ median forecast. Accelerated shipments to major world markets including Japan, European Union and the US further affirm this claims.
Since there is still boom in the export trade, many have questioned why the expected meltdown hasn’t materialized. In response, Ding Shuang, Standard Chartered economist said “It’s still about timing. Exporters still have incentive to front-load shipments ahead of Christmas and Thanksgiving holidays” Ding added.
The Chinese Yuan which has stayed down against the US dollar since the second quarter of the year, according to Wind – has made Chinese goods cheaper for buyers overseas. In the same vein, imports in September rose to 14.3% from the previous twelve months. This is short of the economists’ median forecast of 16% and the August’s 20% margin. China experienced a widened trade surplus of US$3.78 billion account for the rise from US$27.91 billion to US$31.69 billion.
This trade surplus with the US set a new record for the second consecutive month, recording a US$3 billion surplus in September from US$31.1 billion to US$34.1 billion as revealed by customs data retrieved from The Wall Street Journal. The imbalance only goes on to show that the trade dispute is not likely to be resolved in the short term, economists said.
It will be recalled that Trump sanctions on US$250 billion of Chinese products with a view to increase it to US$257 billion, a move that made the Chinese capital to retaliate with a seemingly lower tariffs on US$110 billion of US products.
The tariffs in now deterred China’s export to the US. This is evident in the rise to 14% in September from the 13% recorded in August. In a reverse situation, the US export to China suffered a decline of 1.2% from the 2.2% increase recorded in August.
This saga is far from ending and the disputes from trades across the borders will certainly have an impact directly and indirectly on how the two giants fare in the end. The impact of this dispute may not be felt now, but will evident in 2019.
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