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China's export machine to keep humming ahead of stiffer U.S. tariffs: Reuters poll

Reuters  |  BEIJING 

(Reuters) - China's exports are expected to have expanded at a healthy clip in October as businesses frontloaded orders before higher U.S. tariffs set in at the turn of the year, a poll showed.

Imports growth is also forecast to have been solid, as ramps up investment and further spurs domestic consumption to counter growing economic headwinds.

But their growth rates are forecast to remain on a gradual decelerating trajectory, with future orders already showing signs of cooling as businesses fret over uncertainties stemming from a months-long trade row between and

China's October exports likely grew 11 percent from a year earlier, slower than the previous month's 14.5 percent jump but faster than August's 9.8 percent gain, according to the median estimate of 36 economists in the poll.

Import growth is expected to have eased modestly to 14 percent from 14.3 percent in September.

The has levied additional duties of between 10 percent and 25 percent on $250 billion of Chinese goods this year as punishment for what it calls the country's unfair trade practices, with the 10 percent tariffs set to rise to 25 percent from January next year.

Companies have been ramping up shipments before stiffer U.S. duties go into effect, though factory surveys have shown export orders have been shrinking for several months.

Abell Lu, of Chinese Motoma Power, said he has seen a 10 percent increase in business demand recently since their U.S. customers rushed to place more orders ahead of the next line of tariffs.

STABILISING GROWTH

China's overall trade surplus is expected to have rebounded to $35 billion in October from $31.7 billion in the previous month.

While China's exports have been surprisingly resilient so far to U.S. tariffs, Washington's threat of more duties in an escalating trade conflict has depressed global sentiment and rocked financial markets.

Many economists still see a further slowing in China's external trade as a major threat to growth.

Motoma Power's Lu also said the recent boom in his business is likely to be short-lived, as their U.S. clients were already looking to buy from other countries instead of

More tangible signs of a sharper slowdown ahead have emerged. The value of signed export orders to the at China's largest trade fair, which concluded on Sunday, dropped 30.3 percent on the year.

Many are anxiously awaiting a scheduled meeting between U.S. and his Chinese counterpart at the Group of 20 leaders summit in at the end of November.

Both sides have exhibited more willingness to resolve their trade dispute recently, and will hold a delayed top-level security dialogue on Friday, after Trump and Xi spoke in a phone call last week.

Responding to a slowing and rising headwinds to growth, announced several measures in October to stabilise its capital markets, including central to provide credit lines to support small- and medium-sized companies and a detailed draft proposal for personal income tax deductions.

Beijing has already cut the level of cash banks must hold as reserves four times this year, and is expanding fiscal spending. Import taxes have also been cut while export tax rebates were raised further.

"Looking forward, we expect that more growth and capital market stabilization policies to be rolled out," wrote International Capital Corporation's research analysts.

(Reporting by and Ryan Woo; Additional Reporting by Joyce Zhou; Editing by Shri Navaratnam)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, November 06 2018. 14:42 IST
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