Trade wars: Chinese exporters warn that their business is growing at its slowest pace in three years


  • The Chinese government is already moving more quickly towards outright economic stimulus.
  • A survey suggests that economic conditions are weakening further.

The Financial Times has reported that Chinese exporters have warned that their business is growing at its slowest pace in three years as the trade war takes a greater toll. 

Key notes from the article:

  • Furthermore, more than a quarter of firms now believe that the trade war is a permanent fixture of relations with the US, and not just a passing feature of the Trump administration, according to the latest FT Confidential Research survey of exporters. 
  • The June survey was conducted as hope grew among global investors that a meeting in Osaka between presidents Xi Jinping and Donald Trump at the end of the month might at least result in an agreement to withhold further tariffs and resume official dialogue. 
  • Although Chinese state media have struck a defiant tone, our latest survey suggests the trade war is increasingly painful for exporters, with 37 per cent of the 200 companies polled in June saying it was having some or a very negative impact on their business. 
  • While 61 per cent of exporting firms said the trade dispute was having no impact, our broader export survey showed the sector continuing to lose steam, with volume and value growth slowing sharply, and sequential and year-on-year gauges of profitability showing big falls. Our headline index fell 2.1 points from May to 50.9, its weakest reading since June 2016. 
  • The FTCR China Freight Index, a survey of 200 air, rail, road and waterway logistics firms, fell 1.4 points from May to 47.5, its lowest level since last June. The survey found a growing number of firms reporting that volumes were being hit by slower business, suggesting that economic conditions are weakening further.
  • In recent weeks, the government has signalled a more assertive approach to stimulus than that seen over the past year, including a loosening of restrictions on infrastructure project financing. In the event that Mr Trump and Mr Xi fail to agree, the likelihood increases that tariffs will be imposed by the US on practically all Chinese goods imports. 
  • With economic conditions fragile, the Chinese government is already moving more quickly towards outright economic stimulus. The speed at which it travels to this policy position will be that much faster should the worst-case scenario become reality.

FX implications:

AUD/USD and the dollar are directly implicated by trade war news while risk-off currencies such as JPY and CHF will catch a bid on worsening sentiment and deteriorating prospects of a solution tot he Chinese/US trade war saga. 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD consolidating its losses amid Brexit and trade uncertainty

EUR/USD is off the weekly highs but holds onto 1.11 amid uncertainty about the Brexit process and doubts that the US and China can reach a deal. Tension toward the ECB meeting mounts.

EUR/USD News

GBP/USD attempting to recover after parliament slowed down the Brexit process

GBP/USD is moving up toward 1.29, trying to recover after parliament rejected the fast-track process that PM Johnson wanted for approving his Brexit deal. An extension to Article 50 and elections are on the cards.

GBP/USD News

USD/JPY struggles below mid-108.00s, over one-week lows

The Greenback held weaker against its Japanese counterpart, with the USD/JPY pair struggling below mid-108.00s, or over one-week lows set earlier this Wednesday.

USD/JPY News

Gold: Clings to gain near the top end of 2-week old trading range

Gold gained some follow-through traction for the second consecutive session on Wednesday and is currently placed at the top end of a near two-week-old trading range.

Gold News

Cryptocurrencies price prediction: Bitcoin Cash, Ethereum & IOTA

The crypto market is bleeding across the board. Major cryptos like Bitcoin and Ethereum fall overnight while Bitcoin Cash engaged the reverse gear during Wednesday’s European session.

Read more

Forex MAJORS

Cryptocurrencies

Signatures