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China’s exports up 1.1% as trade war rolls on

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The US has threatened to impose tariffs on nearly all goods entering the country from China as their trade war rumbles along. JUSTIN SULLIVAN/GETTY IMAGES/AFP

China’s exports up 1.1% as trade war rolls on

China's exports beat gloomy forecasts to rebound in May though imports sank more than expected, official data showed on Monday, as concerns lingered about the impact of its ongoing trade war with the US.

The spat between the world’s top two economies escalated last month, with US President Donald Trump increasing tariffs on $200 billion in Chinese goods.

But Chinese exports to the world bounced back to rise 1.1 per cent last month after falling 2.7 per cent in April, according to customs data. Analysts surveyed by Bloomberg News had forecast a 3.9 per cent drop.

Imports, however, plummeted 8.5 per cent after rising 4.0 per cent in April.

The trade surplus surged to $41.7 billion in May compared with $13.8 billion the previous month. The politically sensitive surplus with the US was $26.9 billion, up from $21 billion in April.

Stalled trade talks

Trade talks between Beijing and Washington have stalled while the two countries have threatened to slap more sanctions on each other.

Trump has blacklisted Chinese telecom giant Huawei and warned that he could impose tariffs on nearly all remaining products from China, worth more than $300 billion.

Beijing responded to Trump’s latest tariff hike by increasing levies on $60 billion of US products on June 1.

China is also preparing its own blacklist of “unreliable” companies and has suggested that it could halt exports of rare earth minerals – key to the production of many high-tech goods – to the US.

Trump is expected to meet Chinese President Xi Jinping at the G20 summit in Japan at the end of the month.

US Treasury Secretary Steven Mnuchin during a G20 meeting of finance ministers on Saturday said any potential deal with China will wait until the two presidents meet later this month, but Washington was ready to impose new tariffs if talks fail.

Analysts said despite the rebound in exports, China’s trade outlook is likely to suffer because of the turbulence ahead.

“While exports rose in May, weaker global demand and the escalating trade war suggest that they will start to fall again before long,” Marcel Thieliant, senior economist at Capital Economics, said in a note.

Others attributed the bounce in May to exports being scheduled so they are shipped ahead of when tariffs kick in, pointing to a likely drop later in the year.

“The better-than-expected exports in May, which could have been helped by a depreciation in … [China’s currency] and front-loading of shipments amid fears of higher US tariffs, do not change our overall cautious view on China’s export look for 2019,” Betty Wang, Senior China Economist at ANZ Research, said in a note.

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