China’s exports topped forecasts in April, buoyed by demand for materials from overseas manufacturers who rushed out goods to make the most of US President Donald Trump’s 90-day tariff pause.
The fortunes of trade-reliant businesses on both sides of the Pacific now hinge on talks between China and the US taking place in Switzerland this weekend, which could see levies reduced and some progress on export controls.
Outbound shipments from the world’s second-largest economy rose 8.1% year-on-year in April, customs data showed today, beating a forecast 1.9% increase in a Reuters poll of economists but slowing from the 12.4% jump in March.
Trump announced sweeping “reciprocal tariffs” of 10% on April 2, before offering a reprieve while the White House worked on multiple trade deals.
China, however, was singled out for levies of 145%, kicking off a protracted cat-and-mouse game that has rattled global markets and stands to upend supply chains.
Chinese manufacturers had also been front-loading outbound shipments in anticipation of the duties.
But they are now banking on ice-breaker tariff talks between American and Chinese officials in Switzerland this weekend, as domestic demand remains weak and Trump’s levies are expected to squeeze buyers in other markets.
Imports fell 0.2%, compared with expectations for a 5.9% drop, pointing to improving domestic demand as policymakers continue to take steps to prop up the $19 trillion Chinese economy.
“The ASEAN countries are speeding up their production to meet the July deadline, the 90-day negotiation break. Their production is highly reliant on China’s exports in raw materials and industrial inputs, so China’s exports got support,” said Dan Wang, China director at Eurasia Group.
“Over the next two months, China’s exports could continue to be strong due to industrial capacity relocation, but the trade data could deteriorate quite quickly if the 145% tariffs on China are still in place and ASEAN countries’ talks (with the Trump administration) don’t make progress,” she added.
Exports to Southeast Asian countries rose 20.8% in April.
China’s trade surplus with the US dropped to $20.5 billion last month from $27.6 billion in March, a win for Trump, who has repeatedly said he wants to narrow the gap.
If not lowered or removed, the tariffs could deal a heavy blow to China’s economy, which has relied on exports to drive growth as it struggles to recover from the pandemic shocks and a protracted property market slump.
“The damage of the US tariffs has not shown up in the trade data for April,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “I expect the trade data will weaken in the next few months gradually.”
“Hopefully, the trade negotiations between China and the US can reach agreement soon and bring down tariffs to mitigate the shock to global trade,” he added.
Beijing has in the past few months reiterated its confidence that China could achieve the “around 5%” growth target for the year, and rolled out measures to bolster consumption and support the country’s exporters.
A slew of monetary stimulus measures, including liquidity injections and cuts to policy rates, were announced this week in a bid to ease tariff hits on the economy.
Article Source – China’s exports top forecasts helped by foreign rush to beat tariffs – RTE