China posts worst export
fall since 2009 as fears of U.S. trade war loom
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[January 13, 2017]
By Elias Glenn and Sue-Lin Wong
(Reuters) - China's massive export engine sputtered for the second year
in a row in 2016, with shipments falling in the face of persistently
weak global demand and officials voicing fears of a trade war with the
United States that is clouding the outlook for 2017.
In one week, China's leaders will see if President-elect Donald Trump
makes good on a campaign pledge to brand Beijing a currency manipulator
on his first day in office, and starts to follow up on a threat to slap
high tariffs on Chinese goods.
Even if the Trump administration takes no concrete action immediately,
analysts say the specter of deteriorating U.S.-China trade and political
ties is likely to weigh on the confidence of exporters and investors
The world's largest trading nation posted gloomy data on Friday, with
2016 exports falling 7.7 percent and imports down 5.5 percent. The
export drop was the second annual decline in a row and the worst since
the depths of the global crisis in 2009.
It will be tough for foreign trade to improve this year, especially if
the inauguration of Trump and other major political changes limit the
growth of China's exports due to greater protectionist measures, the
country's customs agency said on Friday.
"The trend of anti-globalization is becoming increasingly evident, and
China is the biggest victim of this trend," customs spokesman Huang
Songping told reporters.
"We will pay close attention to foreign trade policy after Trump is
inaugurated president,” Huang said. Trump will be sworn in on Jan. 20.
China's trade surplus with the United States was $366 billion in 2015,
according to U.S. customs data, which Trump could seize on in a bid to
bring Beijing to the negotiating table to press for concessions,
economists at Bank of America Merrill Lynch said in a recent research
A sustained trade surplus of more than $20 billion against the United
States is one of three criteria used by the U.S. Treasury to designate
another country as a currency manipulator.
China is likely to point out that its own data showed the surplus fell
to $250.79 billion in 2016 from $260.91 billion in 2015, but that may
get short shrift in Washington.
"Our worry is that Trump’s stance towards China’s trade could bring
about long-term structural weakness in China’s exports," economists at
ANZ said in a note.
"Trump’s trade policy will likely motivate U.S. businesses to move their
manufacturing facilities away from China, although the latter’s efforts
in promoting high-end manufacturing may offset part of the loss."
On Wednesday, China may have set off a warning shot to the Trump
administration. Beijing announced even higher anti-dumping duties on
imports of certain animal feed from the United States than it proposed
"Instead of caving in and trying to prepare voluntary export restraints
like Japan did with their auto exports back in the 1980s, we believe
China would start by strongly protesting against the labeling with the
IMF, but not to initiate more aggressive retaliation ... immediately,"
the BofA Merrill Lynch Global Research report said.
"That said, even a 'war of words' could weaken investor confidence not
only in the U.S. and China, but globally."
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Container boxes are seen at the Yangshan Deep Water Port, part of
the Shanghai Free Trade Zone, in Shanghai, China September 24, 2016.
REUTERS/Aly Song/File Photo
CHINA'S DECEMBER EXPORTS FALL
China's December exports fell by a more-than-expected 6.1 percent
on-year, while imports beat forecasts slightly, growing 3.1 percent on
its strong demand for commodities which has helped buoy global resources
An unexpected 0.1 percent rise in shipments in November, while scant,
had raised hopes that China was catching up to an export improvement
being seen in some other Asian economies.
China reported a trade surplus of $40.82 billion for December, versus
November's $44.61 billion.
While the export picture has been grim all year, with shipments rising
in only two months out of 12, import trends have been more encouraging
of late, pointing to a pick-up in domestic demand as companies brought
in more raw materials from iron ore to copper to help feed a
China imported record amounts of crude oil, iron ore, copper and
soybeans in 2016, plus large volumes of coal used for heating and in
"Trade protectionism is on the rise but China is relying more on
domestic demand," said Wen Bin, an economist at Minsheng Bank in
Prolonged weakness in exports has forced China's government to rely on
higher spending and massive bank lending to boost the economy, at the
risk of adding to a huge pile of debt which some analysts warn is
nearing danger levels.
Data next Friday is expected to almost certainly show that 2016 economic
growth hit Beijing's target of 6.5-7 percent thanks to that flurry of
But signs are mounting that the red-hot property market may have peaked,
meaning China may have less appetite this year for imports of
"It is hard to see what could drive a more substantial recovery in
Chinese trade," Julian Evans-Pritchard, China Economist at Capital
Economics, wrote in a note.
"Further upside to economic activity, both in China and abroad, is
probably now limited given declines in trend growth. Instead, the risks
to trade lie to the downside...," he said, saying the chance of a
damaging China-U.S. trade spat has risen since Trump's appointment of
hardliners to lead trade policy.
A decline in China's trade surplus in 2016, to just under $510 billion
from $594 billion in 2015, may also reduce authorities' ability to
offset capital outflow pressures, which have helped drive its yuan
currency to more than eight-year lows, ANZ economists said.
(Reporting by Lusha Zhang, Elias Glenn, Sue-Lin Wong and Kevin Yao;
Writing by Sue-Lin Wong; Editing by Kim Coghill)
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