US's President Donald Trump and China's President XI Jinping in their last meeting - Photo by The State Council The People's Republic of China

JAKARTA (TheInsiderStories) –  China foreign trade of goods fell 13.8 percent in February to US$266.36 billion compared to same month in 2018. While, Exports dipped 20.7 percent to $135.24 billion last month and imports decreased 5.2 percent to $131.12 billion in the same month, customs data showed on Friday (03/08).

The data showed, exports to United States (US) fell 9.9 percent, while imports tumbled 32.2 percent during the two-month period. This is China’ largest drop in three years, led by a large fall in trade with the US. The total export decline was much greater than expected, possibly providing the first evidence of the impact of US tariffs on Chinese goods.

Last month, China imported 19.9 percent less from the US last month, down to $7.9 billion from $9.2 billion in January. It also exported 14.1 percent fewer US goods, suggesting that trade between the world’s two biggest economies is beginning to slow.

However, deducting by the Spring Festival factor, China’ foreign trade rose 3.9 percent in annual basis (YoY) in February, with exports increasing 1.5 percent and imports rising 6.5 percent, respectively, in US dollar-denominated terms.

During the first two months, China’ foreign trade amounted to $622.72 billion, down 3.9 percent YoY. Exports were down 4.6 percent to reach $353.21 billion, while imports retreated 3.1 percent to $309.51 billion. The trade surplus stood at $43.7 billion, down 13.6 percent from one year earlier.

During the Jan-Feb period, China’ trade with the European Union, ASEAN countries, and Japan increased 8.9, 1.9 and 4 percent, respectively, while trade with countries along the Belt and Road registered faster-than-average growth, with the combined trade volume standing at $191 billion, up 2.4 percent YoY.

But, the total export drop will add to fears over a widespread economic slowdown and the effects of the US-China trade war on China’ economy. The country’ trade data were better than economists expected in January, largely due to front-loading of exports before the Lunar New Year Holiday that started on February 5, 10 days earlier than the previous year.

The data rounds off a week of poor trade data from both the US and China, suggesting that both economies are suffering from their tariff war, but also a slowing global economy.

On Wednesday, it was announced that hhe US’ 2018 trade deficit with China was $419.2 billion – the highest on record.

While Trump pledged to level the US trade balance, the total national trade deficit has risen by $100 billion since he took office and now sits at $621 billion.

Within this, the 2018 goods deficit of $878.7 billion was the highest on record. US Census data shows that in 2018, the country imported more cars, consumer goods, food and beverages than ever, despite Trump’s plans to bring manufacturing back to the US.

American exports still grew in 2018 – by 6.3 percent – but just not as fast as imports, which rose by 7.5 percent. The increase in imports is partly attributable to a resolutely strong overall economic picture in the US.

Economic growth dipped to 2.6 percent in the final quarter of 2018, but this is still stronger than most other major Western economies. It also shows the effects of a strong dollar and weak yuan, which has been devalued over the course of the eight-month trade war.

Both Beijing and Washington are under pressure to seal a deal to end the trade war. Reportedly, a deal will be reached before the end of March which would likely see China make large scale purchases of US goods in return for a removal of tariffs.

All of this fueled worries about the softening global economy. On Thursday, the European Central Bank (ECB) delayed its next interest rate hike and announced a new round of cheap loans for banks. This was seen as an acknowledgement of weaker growth by the bank.

All of this fueled worries about the softening global economy. On Thursday, the ECB delayed its next interest rate hike and announced a new round of cheap loans for banks. This was seen as an acknowledgement of weaker growth by the bank.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com