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Why Do China's Imports And Exports Become More Prosperous As The United States Fights A Trade War?
Kinghood International Logistics Inc | Updated: Dec 10, 2018

On one hand, the first China international import expo is in full swing, and on the other hand, foreign trade has delivered a beautiful report card in October.China's exports and imports both grew much faster than expected in October, according to data released by the general administration of customs.

According to customs statistics, in the first 10 months of this year, China's import and export of goods totaled 25.05 trillion yuan, an increase of 11.3% over the same period last year.Exports totaled 13.35 trillion yuan, up 7.9 percent.Imports totaled 11.7 trillion yuan, up 15.5%.The trade surplus was 1.65 trillion yuan, down 26.1%.

In October, China's imports and exports totaled 2.75 trillion yuan, up 22.9%.Exports totaled 1.49 trillion yuan, up 20.1%, the highest since February.Imports reached 1.26 trillion yuan, up 26.3%, the highest level in the last three months.The trade surplus was 233.63 billion yuan, down 5%.

October was not traditionally a strong month for China's foreign trade growth due to the long holiday, and this year is the first full month since the new round of tariffs on China was imposed by the United States.As a result, the unexpectedly strong growth in China's foreign trade data has not only boosted confidence but also been good news for some who fear global demand could fall sharply in the third quarter.

Since the start of the trade war with the United States, many have worried that China's exports have stalled, but China has responded to the massive trade war with glowing trade figures.

In the first 10 months of this year, China's imports and exports of goods totaled 25.05 trillion yuan, up 11.3 percent from the same period last year.Exports totaled 13.35 trillion yuan, up 7.9 percent.Imports totaled 11.69 trillion yuan, up 15.5%.The trade surplus was 1.66 trillion yuan.On a country-by-country basis, imports and exports to major markets such as the European Union, the United States, asean and Japan all grew, while imports and exports to countries along the "One Belt And One Road" route grew faster than the overall figure.

On the whole, this year's foreign trade is in line with the statistical law of strong imports in the first half of the year and strong exports in the second half of the year.

But October's exports and imports far exceeded expectations.Exports rose 15.6 per cent year-on-year in dollar terms in October, beating market expectations of 11.7 per cent from 14.5 per cent.China's imports in September were 21.4 per cent year on year, up sharply from an expected 14.5 per cent and 14.3 per cent respectively.The trade surplus in October was $34.01 billion, lower than expected at $35.15 billion, with the trade surplus with the U.S. shrinking to $37.78 billion from the previous month.

The trade frictions between China and the United States have not had much impact on exports, mainly because the depreciation of the exchange rate has partially offset the impact of tax increases. The nominal effective exchange rate of the RMB has also been mainly devalued since June, which has had an immediate effect on exports.In renminbi terms, the surplus shrank 5 per cent in October from a year earlier, and could shrink even more if the exchange rate alone is taken into account.

The yuan fell 1.32% against the dollar in October, according to calculations, and has lost more than 9% of its value against the dollar between mid-june and the end of October.

At the same time, China's solid import growth has surprised markets.On the one hand, it is due to the increase of commodity reserves such as crude oil before winter, and on the other hand, it is related to a series of import expansion measures, such as tariff reduction.Chinese President xi jinping announced at the first international import expo that he expects China's imports of goods and services to exceed us $30 trillion and us $10 trillion respectively in the next 15 years, which will drive China's imports to remain strong.

What is worth mentioning is that in the first 10 months of this year, China's exports to the United States reached 2.56 trillion yuan, up 8.7%.Imports from the United States totaled 873.38 billion yuan, up 3.7%.The trade surplus with the United States was 1.69 trillion yuan, an increase of 11.5 percent.During the trade war, China's trade surplus was still expanding, which actually showed that the trade war had less impact on China's exports to the United States than expected.

This can be seen in container rates from China to the west coast of the United States.Even with the tariffs already in place, container rates from China to the west coast remained near record highs at 790 in October, up one percentage point from the previous month, according to the data, suggesting exports could stabilize before the end of the year.

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