China increases exports in September, creating record surplus with US despite tariffs

BEIJING (Reuters) – China's vast export engine rose unexpectedly in September, generating a record trade surplus with the United States that could exacerbate the already exacerbated conflict between Beijing and Washington.

Analysts said last month's strong export growth – which could indicate that US tariffs are not yet very advantageous – should be maintained.

But robust figures reported Friday by the Chinese Customs Agency – the latest in China ahead of the November 6 congressional elections – could spark a reaction from US President Donald Trump.

Customs data showed that September's exports increased by 14.5% over the previous year, the fastest pace since February. This figure was well above the 9.8% of August and the forecasts of 8.9% of Reuters polls.

"The situation as a whole is that Chinese exports have so far held up well in the face of escalating trade tensions and slowing global growth, presumably thanks to the revitalization of the competitiveness provided by a renminbi. weaker, "said Julian Evans-Pritchard, chief economist at China Capital Economics.

"While global growth is expected to slow further in the coming quarters and US tariffs will become even more penalizing, the recent resilience of exports is unlikely to occur."

YUAN DEPRECIATION

A weaker yuan CNY = CFXS, which depreciated by about 6 percent against the dollar this year, may have eased the $ 250 billion export price burden to the United States. United.

Despite some officials' concerns about the depreciation of the yuan, the US Treasury has not recommended qualifying China as "currency manipulator" in a future report on foreign exchange practices, the press reported on Thursday.

China's politically sensitive surplus with the United States stood at $ 34.13 billion in September, surpassing the record of $ 31.05 billion reached in August.

Beijing's export data surprisingly resisted tariffs, perhaps because companies increased their shipments before the entry into force of wider and more rigid US tariffs, raising concerns about stronger decline in export strength when all tariffs come into effect.

"The impact on the front is quite obvious to me," said Betty Wang, chief economist for China at ANZ in Hong Kong.

She mentioned increased exports of electrical machinery – China's main export product to the United States – a sign that exporters may have pushed their deliveries before the implementation of the latest tariffs on Chinese exports. , worth $ 200 billion.

"OTHER RISK OUTSIDE"

In addition to electrical machinery, exports of textiles, furniture and chips all grew faster than the previous month, according to customs data.

"If that is the case, then I think other downside risks can be expected in the fourth quarter," Wang said.

Li Kuiwen, a spokesman for the country's customs agency, also told reporters that trade growth may slow down somewhat in the fourth quarter.

On September 24, the two largest economies in the world imposed tariffs on their products, one after the other. No specific date has been set for the next round of tariffs, even though Trump has repeatedly threatened to impose them on almost all Chinese products. .

China's exports to the United States continued to grow at a double-digit rate in September compared to the previous year, while imports fell for the first time since February.

In the first nine months of the year, the Chinese surplus with its largest export market amounted to $ 225.79 billion, compared to about $ 196.01 billion for the same period last year. 'last year.

Overall import growth for September was more of a moderate slowdown, in line with signs of a general slowdown in domestic demand.

Imports rose 14.3% in September, up from 19.9% ​​in August, but slightly ahead of analysts' forecasts of 15.0% growth.

Imports of iron ore reached their highest level in four months as steel mills increased production ahead of winter production restrictions.

Feel the heat

For trade with all countries, China had a surplus of 31.69 billion dollars in September, against 19.4 billion in a poll by Reuters and 27.89 billion in August.

The Chinese economy is feeling some heat because of tariff disputes and signs of a slowdown that prompted the central bank to soften its policy by lowering the reserve requirement ratio (RRR) of banks for the fourth time this year.

A survey of private companies showed that the growth of China's factories sector stopped after 15 months of growth in September, with export orders falling in more than two years. An official investigation also confirmed a further weakening of manufacturing.

To support growth, Beijing is committed to increasing export tax cuts from Nov. 1 for the second time this year and to lighten the burden of business on a larger scale in order to boost business growth. help Chinese companies in difficulty.

The International Monetary Fund on Tuesday lowered its global economic growth forecast for this year and the following year, saying the trade war between the US and China was having a negative impact. It also reduced China's growth forecast for next year from 6.4 percent to 6.2 percent.

China will reduce tariffs on a wide range of goods as of November 1, as part of Beijing's pledge to take steps to increase imports this year in a context of increasing tension.