China: Export pain from the trade war – Nordea Markets

Amy Yuan Zhuang, analyst at Nordea Markets, notes that China’s exports fell by 4.4% y/y in December, while imports plunged by 7.6% in dollar terms and eliminated any doubt that the Sino-US trade war having a painful effect on the Chinese economy. 

Key Quotes

“There are several factors contributing to the poor trade numbers. The first and most important factor is the trade war with the US. Chinese exports to the US fell by 3.5% y/y and its imports from the US fell by a record of 35.8%.”

“The second factor is the USD/CNY exchange rate. The USD has lost 1.2% against the CNY during December. The trade numbers measured in USD are therefore affected. For this reason, exports and imports on CNY terms look better much than on USD terms. Exports rose by 0.2% y/y on CNY terms and imports fell by 3.1%. The last factor affecting the trade numbers is the plunge in oil prices.”

“Looking ahead, the trade number will likely remain weak in the coming months. We still expect GDP growth to be lower this year than in 2018 but see small likelihood for a sharp slowdown.”

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