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Global Markets Weekly Update - China

13.11.18 19:48

China reported a surprisingly large increase in October exports, underscoring strong global demand for the country’s
goods despite the imposition of U.S. tariffs.

Chinese exports climbed 15.6% in dollar terms in October from a year ago, above September’s 14.5% advance and
economists’ 11% forecast.

Imports also rose more than expected, though imports from the U.S. declined for the second-straight month.

October’s export surge was driven by strong demand from both developed and emerging markets, as well as from
businesses rushing to place export orders before tariffs take effect.

A weaker Chinese currency has also offset the impact of U.S. tariffs, the yuan has lost 9% of its value against the
U.S. dollar in the six months ended in October and is down nearly 7% this year, making Chinese goods cheaper for
overseas buyers and effectively wiping out the punitive impact of U.S. levies.

Analysts see China’s export growth slowing as demand from frontloading fades in the coming months.

On the other hand, the persistent trade imbalance with the U.S. suggests that the trade impasse between the
countries won’t be resolved anytime soon.

China’s trade surplus with the U.S. narrowed last month to $31.8 billion—down from September’s record $34.1
billion but still a relatively high figure that leaves China on track to post another record annual surplus with the U.S.

Barring an unexpected resolution, the prospect of a years-long “cold war” between the U.S. and China in trade
appears increasingly likely.

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