BEIJING (REUTERS, AFP) – China’s exports rose for the first time in five months in December and by more than expected, signalling a modest recovery in demand as Beijing and Washington agreed to defuse their prolonged trade war.
The world’s largest economies are set to sign a Phase 1 trade deal on Wednesday (Jan 14), marking a significant de-escalation but not an end to a dispute that has rattled financial markets and weighed heavily on global business confidence.
China’s December exports rose 7.6 per cent from a year earlier, customs data showed on Tuesday. The median forecast from a Reuters poll of analysts had been for a 3.2 per cent rise in shipments, following November’s 1.3 per cent drop.
Imports also surpassed expectations, jumping 16.3 per cent from a year earlier and boosted in part by higher commodity prices. The Reuters poll had forecast 9.6 per cent growth versus 0.5 per cent in November.
While comparisons with a weak December last year flattered both figures, they also pointed to improving demand, both globally and in China, analysts said.
The data also showed China’s politically-sensitive trade surplus with the US narrowed last year. The perennial US trade deficit with China has been a major source of anger for US President Donald Trump, who has slapped tariffs on hundreds of billions of dollars worth of Chinese goods, triggering tit-for-tat responses from Beijing.
China posted a trade surplus of US$46.79 billion in December, compared with the poll’s forecast for a US$48 billion surplus, up from November’s surplus of US$37.93 billion.
For all of 2019, its exports proved remarkably resilient to trade tensions, rising 0.5 per cent, while imports fell 2.8 per cent.
China’s trade surplus with the US for December stood at US$23.18 billion, according to Reuters calculations based on customs data, down from November’s surplus of US$24.60 billion.
China exports to the US fell 12.5 per cent in 2019, compared with a rise of 11.3 per cent in 2018. Imports from the United US fell 20.9 per cent, versus a 0.7 per cent rise in the previous year.
Overall sentiment improved last month after the two sides reached the Phase 1 deal, which is expected to cut tariffs and boost Chinese purchases of US farm, energy and manufactured goods while addressing some disputes over intellectual property.
China’s Vice Premier Liu He is in Washington from Jan 13-15 to sign the interim agreement.
However, analysts say the deal does not spell the end of trade tensions and the risk of further complications and re-escalation remains.
“Our judgment is Phase 1 will not put an end to Trump Trade Wars,” analysts with MUFG Bank wrote in a research note prior to the data.