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ECONOMY: China Shows Robust Trade Performance
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China Shows Robust Trade Performance
By Morgan Brady

BT 201809 Economy 01中国第二季度经济增速放缓,贸易量增加。第二季度中国经济增速稳定,某些领域增速放缓,上半年固定资产投资创近二十年最低水平。中国政府承诺增加银行系统流动性,放宽财政政策,鼓励借贷,以刺激经济。与此相反,中国房地产市场释放出积极信号,房地产价格同比上涨 16.2%,零售业同比增长 8.8%。七月份,中国进口总额同比增长 27.3%,高于预期,出口总额同比增长 12.3%。尽管中美贸易关系紧张,美方调高关税税率,中国对美国出口总额已经达到 410 亿美元,占中国总出口额 19.3%,中美贸易顺差达到 281 亿美元。中国是国际金属贸易重要成员,尽管美国提高其金属进口关税,由于中国对美国金属出口比例很小,中国金属出口总额影响不大。此外,人民币贬值在一定程度上有利于出口增长。有专家指出,中美贸易顺差增长速度会随着美国关税的提高以及全球经济增速放缓而逐渐降低。

China’s imports increased more than what was expected in the month of July. They rose by 27.3%. Exports also increased despite the trade tensions and the higher tariffs levied by the US. These exports increased by 12.3% on a year on year basis. To the US alone, China’s exports rose to $41 billion. Shipments to the US amounted to 19.3 percent of the total shipments. The trade surplus with the US now remains at a high level at $28.1 billion, according to Bloomberg. This is only slightly lower than the trade surplus in June at $28.97 billion.

Both imports and exports were better than June numbers, showing that China’s economy remains on a robust growth path. In June, imports had grown by 14.1% and exports by 11.3% on a year on year basis.

In terms of metals, China is a major player on a global scale in this arena. China’s metal exports to the US are only a very small part of its overall exports. Therefore, the impact of metal tariffs will likely be miniscule on China, as the exports data shows clearly. Moreover, the success of Chinese exports oversees is putting pressure on American steel companies, who will be forced to reduce their prices to compete. Currently, American suppliers are increasing their prices, which is affecting the users negatively, and leading the entire sector to underperform.

BT 201809 Economy 03A Weaker Yuan Helped Boost Exports

One of the factors that helped China maintain its export performance despite the high tariffs of 25 percent was the weaker Yuan. The Chinese currency declined steeply recently which helped to offset the effects of tariffs on $34 billion worth of goods.

Despite the good performance, some analysts believe that effects of trade spat between the two biggest economies in the world have not been felt in their entirety yet. Those analysts believe that China’s trade balance will begin to worsen as we move ahead. American tariffs are expected to increase up to 50 percent on 23rd of August.

Another factor that may also weaken the surplus is the softening global economic growth, on which China depends for its exports growth.

Slower Economic Growth

Chinese economy slowed down slightly in the second quarter, driven in part by the crackdown on debt by the government, and due to the tension with the United States. The Chinese government promised that it will inject more liquidity into the banking system and promised a more active fiscal policy to encourage more lending to stimulate economic activity.

Slower Growth in Fixed Assets Investments

Other numbers in July also confirmed the cooling growth. Fixed asset investments dropped down to their lowest level in almost two decades for the first seven months of the year.

Expenditure on public work projects, factory machinery, and other fixed assets investments in non-rural areas in China grew by only 5.5 percent in the period from January to July from a year earlier, according to the National Bureau of Statistics. Growth rate of fixed asset investments in 2017 was 8.3 percent.

This decline in the rate of growth is a concern to some economists, given that it is an important driver for economic growth. Last year, non-rural fixed asset investments accounted for a third of GDP growth in the country.

One of the reasons behind the slowdown is the tightening of regulations on lending by the government, in an effort to reduce borrowing by local governments and corporations to mitigate financial risk and reduce defaults.

Another sign of economic slowdown was higher unemployment at 5.1% in July (it was 4.8% in June). Increase in unemployment can put some pressures on disposable income and decrease effective demand.

On a more positive note, retail sales in China increased by 8.8% in July on a year on year basis. This growth is lower than forecasts at 9 percent and lower than the year on year growth recorded in June at 9 percent.

BT 201809 Economy 02Real Estate Markets

Another positive sign was the improvement in housing prices. Residential property prices in China have increased by 16.2% from one year before, according to official data releases. This is higher than last year’s growth rate of 14.8%.

As regards investment in properties including commercial properties and residential real estate, the investment flow increased by 10.2 percent from the year before in the months from January till July. Growth for the same period last year was 9.7%.

Growth was witnessed mostly in areas with less restriction on property growth, as the government has imposed some strict regulations on larger cities such as Beijing and Shanghai to prevent the market from overheating.


Despite the high trade surplus with the US, Chinese economy may be beginning to feel the pinch of the trade war. A faltering global growth may also cause a slowdown in exports growth. The third factor that could weigh down on growth is the slowdown in the growth of fixed asset investments, although the causes of this slowdown may have more to do with regulations. The economy can still resume its growth path as the government increases liquidity and encourages lending. Growth remains steady, albeit at a slightly slower pace in some areas. But this can change.

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