Chinese exports to the US have risen this year as the country looks to get as many goods as possible off its shores before steeper tariffs come in January.
“This growth is due to exporters’ concern that the 10% tariffs on $200 billion of exported goods to the US will rise to 25% on 1 January 2019, which has led them to front-load exports,” ING said in a report on Friday.
Exports grew 15.6% year-on-year, up from an original consensus of 11.7% growth. Once those tariff hikes kick in, these figures are likely to weaken, ING said.
Experts are pessimistic that the trade war will abate at this month’s G20 summit. US President Trump and Chinese President Xi Jinping will meet at this year’s meeting at the end of November in Argentina. But hopes of a new trade deal between the countries have dampened on the back of negative rhetoric. This is despite booming demand from the US.
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Imports into China are also up as the country boosts infrastructure spending as part of a fiscal stimulus designed to stave off the potential economic pain of Trump’s trade war.
Imports grew 21.4% on the back of doubts about future export possibilities. ING says that China will not strengthen the yuan, which would make imports cheaper, to avoid being labeled a currency manipulator by the US. The Chinese currency has slumped 10% against the dollar since February, boosting export competitiveness.
The looming rise in import tariffs “encourages exporters to rush through orders to the United States,” Louis Kuijs, head of Asia economics at research firm Oxford Economics, said in a client note on November 8.
ING expects Chinese imports to grow more than exports in 2019 as the country brings in building materials and consumables, having cut taxes on the latter. US demand even though President Trump has previously mentioned that he’s prepared to increase tariffs coverage to all of Chinese exports to the United States, which topped $500 billion last year.
China’s stocks have been hammered this year. The benchmark Shanghai Composite Index and Hong Kong’s Hang Seng Index both closed down more than 1.4% on Friday, hurt by trade war fears, among a slowing Chinese economy and other concerns.