Chinese exports fall as Sino-US trade war bites

Manufacturing remained stable in China in November, although the simmering trade war between Washington and Beijing continued to dent exports.

The Caixin Manufacturing Purchasing Managers’ Index was 50.2 against October’s figure of 50.1 and within that a sub-index linked to new orders rose while output was stable, but export sales fell for an eighth-consecutive month, as the trade war hurt outbound shipments.

US President Donald Trump believes that China has an unfair advantage in the world economy that is damaging American companies. He has therefore imposed tariffs on $250bn-worth of goods imported from China, comprising around 40% of all Chinese products sold into the US. China has retaliated by imposing tariffs of its own on American goods.

The Caixin report noted that “weaker external demand continued to weigh on overall sales, as export orders declined further midway through the final quarter.”

The two sides announced a temporary ceasefire at the weekend, with Trump delaying plans to raise the 10% tariff on $200bn-worth of Chinese-made goods to 25% on 1 January to allow for talks between the two sides.

Another $50bn-worth of goods from the Asian giant already pay a 25% penalty.

Zhengsheng Zhong, director of macroeconomic analysis at Caixin Insight, said: “Overall, domestic demand across the manufacturing sector improved in November, while overseas demand was still subdued.

“Production slowed, confidence was relatively stable, capital turnover was improved and upward pressure on industrial product prices eased. China’s economy was weak – but did not show significant signs of deterioration.”

Freya Beamish, chief Asia economist at Pantheon Macroeconomics, said: “Production levels were unchanged, for the second consecutive month, with panellists reporting stricter environmental policies, and weak sales. Overall the gauge agrees with the official version; policies to stimulate the private sector so far have fallen short.”

TD Securities said: “The surprise [PMI] increase, albeit a marginal one, follows a bigger-than-expected drop in official manufacturing PMI, which fell to 50, its lowest since July 2016. The index has slid over recent months as the exports outlook has darkened.”