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China’s exports soared in October and its trade surplus ballooned, official data showed on Thursday, just days after Donald Trump won the US presidential election with promises of sweeping tariffs to suppress imports from China.
The central bank also set its official exchange rate against the dollar at the lowest level in a year, in a sign that Beijing is expecting further depreciation pressure on the renminbi following Trump’s victory.
President Xi Jinping called Trump on Thursday to congratulate him on his electoral victory, according to Chinese state news agency Xinhua. Xi told Trump that trade between the world’s two largest economies would “benefit from co-operation and suffer from confrontation”, it reported.
But the bumper export figures are expected to inflame tensions between Trump’s incoming administration and Beijing, which could respond to aggressive new tariffs with bigger stimulus action, said analysts and bankers.
China’s dollar-denominated exports rose 12.7 per cent year on year in October, exceeding an average forecast of 5 per cent by analysts surveyed by Bloomberg and a gain of 2.4 per cent in September.
Imports declined 2.3 per cent last month, worse than a Bloomberg forecast of a 2 per cent fall and 0.3 per cent growth in September.
Trade between China and the US was more subdued than the headline figures but still showed strong growth. Exports rose 8.1 per cent in October, while China’s imports from the US climbed 6.6 per cent.
Chinese analysts said China’s burgeoning trade surplus — which hit $95.7bn in October compared with forecasts of $75bn — would provoke Trump, who could undo President Joe Biden’s work in repairing communication between the countries.
“Of course China will be on top of the list,” said Wang Dong, a professor at Peking University. “The stability, the relative improvement that we have been witnessing . . . will probably come to an end,” he added, predicting “a resumption of enmity and antagonism between Washington and Beijing”.
The People’s Bank of China has maintained a strong renminbi policy this year, keeping its daily reference rate — which sets a 2 per cent trading band for the currency — within an unusually narrow range.
The fixed rate on Thursday of Rmb7.166 a dollar marked the currency’s sharpest one-day weakening since April 2022 and came after it tumbled 1 per cent against the dollar on Wednesday.
Trump has threatened to impose 60 per cent tariffs on Chinese goods, which analysts said could spur Communist party leaders, who have been reluctant to embark on a wholesale fiscal stimulus, into more determined action to boost the economy.
Chinese lawmakers are expected on Friday to unveil a fiscal package that will include debt swaps for troubled local governments and potentially additional stimulus measures.
A Trump win “is not necessarily bad for China as this may ‘pressure’ Beijing [to implement] a bigger stimulus”, Qi Wang, chief investment officer for wealth management at UOB Kay Hian, wrote in a note.
But analysts do not anticipate a spending “bazooka” to prop up lagging household demand, which has been hit by a prolonged property slowdown and risks plunging the economy into a deflationary spiral.
“Everyone is expecting a big China fiscal stimulus post the US election.” said a senior investment banker at a US financial institution in Hong Kong who wished to remain unnamed. “I think markets will be far more driven by that than anything else . . . in the near term.”
The size of any additional stimulus will depend on Trump’s new tariffs, experts said. Analysts estimated prior to Trump’s victory that Beijing would need to spend Rmb10tn ($1.4tn) on stimulus directly targeting households, rather than Chinese policymakers’ preferred tools of infrastructure investment and local government refinancing.
“Debt swaps are one item of the package, but there will be other expenditures to stimulate consumption,” said Ma Wei, associate researcher at the Chinese Academy of Social Sciences, a government think-tank in Beijing. “Maybe not in the form of giving money to everyone like in the US, but giving some subsidies to ordinary people to buy goods like cars and electronics.”
Ma predicted policymakers would wait until December or January to announce additional measures. China’s Communist party leadership will hold their annual Central Economic Work Conference, a landmark meeting for economic policy, in December.
Additional reporting by Wenjie Ding in Beijing
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