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China Exports Spur Hope, But Imports Are Still Ugly

China Exports Spur Hope, But Imports Are Still Ugly

(Bloomberg) --

When it comes to global trade these days, the bar is pretty low as to what’s considered good news.

And so a less-than-expected decline in China’s exports in October was greeted with optimism Friday. That’s even though tepid imports show demand in the world’s second-largest economy is still weak.

Here’s the numbers: Exports decreased 0.9% in dollar terms from a year earlier and imports dropped 6.4%. That left a trade surplus of $42.81 billion for the month.

China’s trade surplus with the U.S. was $26.42 billion. Exports to the U.S. are now down 11.3% in dollar terms in the year to date from the same period in 2018.

So what do the numbers tell us?

  • Firstly, that the trade war has curbed China’s shipments to the U.S., but the beefy trade surplus has started climbing again as imports have declined even faster
  • Secondly, the export picture may be stabilizing in China as it sells more to Asean neighbors and sales hold up to the Europe Union (which is actually a bigger buyer than the U.S.)
  • Thirdly, the weaker imports are across most trading partners, with Asean a notable exception, which isn’t such a great sign for the global economy

Meantime, there were mixed messages from Washington following news the U.S. and China have agreed to roll back tariffs on each other’s goods in phases as they work toward a deal.

White House economic adviser Larry Kudlow confirmed the advance in negotiations. “If there’s a phase one trade deal, there are going to be tariff agreements and concessions,” he told Bloomberg.

Kellyanne Conway, senior White House adviser, also said President Donald Trump is “anxious” to sign the deal.

However, White House trade adviser Peter Navarro told Fox Business: “There is no agreement at this time to remove any of the existing tariffs as a condition of the phase one deal. The only person who can make that decision is President Donald J. Trump. It’s as simple as that.”

Charting the Trade War

China Exports Spur Hope, But Imports Are Still Ugly

It’s hard to envisage a post-Brexit trade agreement scenario that won’t hurt U.K. services, according to Bloomberg Opinion’s Theresa Raphael. While grants of EU “equivalency” for British services and other mutual recognition agreements would protect some of the services trade, the Center for European Reform’s Sam Lowe estimates that the impact of a bare-bones free trade agreement would be substantial.

Today’s Must Reads

  • Car tariff relief | Trump will not impose tariffs on EU automotive goods next week as threatened, European Commission President Jean-Claude Juncker said.
  • Missing out | Indonesia is Southeast Asia’s biggest economy, with one of the biggest labor pools in the world. But it punches beneath its weight when it comes to attracting foreign investment.
  • Cambodia tumult | Cambodia has sent troops to its border and called on neighboring countries to arrest exiled dissidents after accusing them of plotting a coup as the EU reviews trade privileges that are essential to the economy.
  • Poultry push | The U.S. Department of Agriculture is moving to allow imports of Chinese poultry in a sign of progress in ongoing trade talks between Washington and Beijing.
  • Superyacht rethink | Even the ultra-wealthy are getting skittish about buying superyachts, as a checklist of global challenges — including the U.S. trade war with China — weigh down sales. 

Economic Analysis

  • China snapshot | A barrage of data next week is likely to show weakness spread across China’s economy in October, with production slowing, factory deflation deepening, and credit pulling back from a seasonal jump. 
  • Recession watch | Germany’s economy probably contracted slightly in the third quarter, marking a technical recession, though a deep downturn looks unlikely.

Coming Up

  • Nov. 11: U.K. trade balance
  • Nov. 12: Trump speaks on trade at the Economic Club of New York
  • Nov. 15: Euro-area, India trade balance

To contact the editor responsible for this story: Zoe Schneeweiss at zschneeweiss@bloomberg.net, Jeff BlackBrian Swint

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