Chinese Exports Rose in July, Amid Trade Tensions – 08 August 2019

Chinese exports surprisingly rose in July, despite the growing trade tensions between China and the United States. However, besides imports remaining weak during that month, it might be temporary since Trump threatened with imposing more tariffs in the upcoming month.

Exports rose by 3.3 percent (year-to-year), the fastest pace since March and beating the analysts’ expectations, as they forecasted a 2.0 percent drop. Imports, on the other hand, fell by 5.6 percent (year-to-year), remaining weak but beating the analysts’ forecasts as they expected an 8.3% drop.

Despite being surprisingly high, this effect may be temporary since the Trade Feud between the United States and China escalated recently. President Donald Trump threatened with imposing tariffs on $300 billion worth of Chinese goods from next month while accusing China of manipulating its own currency. The Chinese Government answered that they would stop buying american farm products.

This lift in exports could be explained by Chinese companies attempt to diversify their export regions since exports to the United States shrank in July due to the growing tensions. The State Information Center attributes it to the “Belt and Road Initiative”, a global development strategy pushed by the Chinese Government whose purpose is strengthening the commercial relationships and the cooperation between China and other countries.

“This year, China did not only increase its market share in major economies like the European Union, what’s more, outstanding is the growth rate in emerging markets is very clear, especially the countries who we work with on Belt and Road,” said the Think thank’s director of the forecasting department.

President Donald Trump is demanding from China to comply with the United States requests concerning many key areas, like intellectual property matters and non-tariff trade barriers. The main purpose of doing so is solving the trade imbalance between both countries since it currently favors China.

“China is intent on continuing to receive the hundreds of Billions of Dollars they have been taking from the U.S. with unfair trade practices and currency manipulation,” said Trump on Twitter earlier this week.

Since the trade negotiations are currently stalled, it’s still not clear whether the Trade Feud will keep escalating or will end with an agreement between the two parties. Recently, a US senator suggested that Congress may intervene if the situation doesn’t change.

“If this doesn’t change soon, I think Congress may end up acting. There are bills that I’ve got pending with Senator Alexander and Senator Portman and I think if this doesn’t end soon, Congress is going to start stepping in more than they have in the past,” said Alabama’s Senator Doug Jones.

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