China's exports shrink most in two years, raising risks for global economy

Posted January 16, 2019

The meetings in China were the first face-to-face discussions since Trump and Chinese President Xi Jinping met in Buenos Aires in December and agreed to a 90-day truce in the trade war, which has disrupted the flow of hundreds of billions of dollars of goods.

"Both countries need to think seriously about how to deal with technology, since areas such as artificial intelligence, robotics, big data, electronic components and telecommunications have both economic and also national security implications", he said.

In the USA, consumer spending accounts for roughly 70 percent of economic activity.

Pang noted Chinese imports of more advanced technology for use in manufacturing smartphones and other higher-technology products declined 14.9 percent in December, almost double the size of the contraction in overall trade.

Beyond the tariffs battle with the U.S., China's economy has been facing its own domestic headwinds. But nearly all of the December shipments likely came from Brazil, said a trader who declined to be identified. "The asymmetries in trade will persist".

China's overall trade surplus with the US hit a record in 2018, underscoring the political imperative to cut a deal ahead of a 1 March deadline after which US President Donald Trump has threatened to impose additional tariffs on Chinese goods.

Few economists are betting on a grand deal that would dissolve the economic confrontations between China and the United States for good. Others are lining up non-Chinese suppliers of industrial components and may have rushed to get some in hand before year-end.

Some companies have shifted production of goods bound for the United States out of China to avoid Trump's tariffs. But their plans call for keeping exports stable to avoid politically risky job losses.

"We do not see the USA fully removing the specter of tariff hikes any time soon", he said in a report.

The customs administration will work to "improve the country's business environment and expand foreign order to keep employment, the financial sector, foreign trade, foreign investment" stable, Li said, adding there are some "hidden concerns" and "uncertain external factors" for development.

As China's growth slows, it's investing less in the U.S.


Past free-trade agreements gave foreign companies incentive to invest in the US, typically in manufacturing and in startup companies. But imposing tariffs can make it hard for a country and its companies to invest in the U.S.

"The global electronics cycle remains the key driver of Chinese exports".

Calder, a renowned Japan expert who served as a special adviser to the USA ambassador to Japan in bilateral trade talks, said Beijing could learn from the past interactions between the United States and Japan to de-escalate current tensions.