China’s exports fall for first time in eight months

As trade tensions escalated in the weeks leading up to Chinese President Xi Jinping’s meeting with US counterpart Donald Trump, China’s exports decreased in October for the first time in eight months, according to official data released on Friday.

Shipments fell 1.1% year over year, falling short of the 2.9% increase predicted by Bloomberg.

According to China’s General Administration of Customs, imports increased by 1% in the same month. That fell short of the 2.7 percent increase predicted in the Bloomberg prediction and far below September’s level.

Following Xi and Trump’s meeting in South Korea at the end of October, China and the US negotiated a detente in their trade war.

That put a precarious pause on months of tit-for-tat measures between the economic and technological powerhouses as the leaders agreed to suspend a raft of measures for a year.

Beijing last month announced fresh restrictions on exports of rare earth technologies, a sector it dominates and is critical to defence and auto manufacturers.

Trump retaliated by threatening an additional 100 percent tariff on Chinese goods.

However, that warning was called off after Xi and Trump met last month in South Korea, with the US leader calling their first encounter since 2019 a “great success”.

Washington halved a blanket tariff on Chinese goods to 10 percent, while Beijing loosened restrictions on rare earth exports of rare earths, also providing relief to European businesses.

China also lifted extra tariffs on US agricultural products including soybeans, critical to American farmers who are a key part of Trump’s base.

China’s imports from the United States fell 11.6 percent month-on-month in October, the customs data showed, while its shipments in the other direction rose 1.8 percent.

Chinese exporters had been “frontloading their trade in order to avoid high tariffs in the US”, Zhiwei Zhang, economist at Pinpoint Asset Management, said in a note.

The country’s shipments to the US jumped 8.6 percent in September from August after falling 11.8 percent on-month from July.

“It seems the frontloading finally faded in October. As the trade war is put on hold for one year, exports will likely normalise,” Zhang said.

But, he warned: “Now that export momentum weakens, China needs to rely more on domestic demand.”