China exports fall as trade relations with US take their toll

China exports for the month of June saw a fall as the USA has ramped up trade pressure. The imports too have shrunk – much more than what was initially expected.

The manufacturers based in China are not at all happy as they are struggling with demand at both home and abroad. The US traffic hike which was announced in May is potentially threatening to crush the already-thin profit margins.

From a year earlier, the exports have seen a fall of 1.3 percent – and while it does not represent a drop as bad as analysts had previously anticipated – it still is bad news for the Chinese economy. Imports on the other hand have seen a huge fall of 7.3 percent. This is much worse than what analysts had previously anticipated.

With the events taken place, China was left with a surplus of $50.98 billion last month, while the surplus in May was $41.66 billion. Analysts on the other hand forecasted a surplus of $44.65 billion for last month.

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Capital economics said in a note : “The latest US tariff hike probably contributed to this drop, alongside a broader showdown in foreign demand.”

“We don’t expect global growth to bottom out until next year. And while the truce reached between [presidents] Trump and Xi at the G20 late last month removes immediate threat of further US tariffs, our base case remains that trade talks will break down again before long.”

Indeed last month was the first full one which marked higher US tariffs on $200bn of Chinese goods. Washington took the decision to implement this weeks before the trade talks between the two countries broke down.

And while it was agreed by both the parties involved that the negotiations would continue, Washington made it clear that it would hold off on additional levies, with the existing tariffs remaining in place.

Unfortunately enough for now, there happens to be time-frame set for the new round of trade talks with two of the world’s largest economies remaining at odds over some significant issues required for an agreement.

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