In November this year, China’s exports to the United States continued to plummet in the double digits, despite a recent trade agreement between the two major economies. According to data released by the Chinese customs on Monday (December 8th), exports to the U.S. in November fell sharply by 28.6% compared to the same period last year. This marks the eighth consecutive month of double-digit decline in China’s exports to the U.S. and the largest drop since August.
However, due to manufacturers shipping large quantities to other markets, China’s overall export performance still exceeded market expectations. In terms of U.S. dollar value, total merchandise exports in November increased by 5.9% compared to the same period last year, surpassing the average economist prediction of 3.8% growth in a Reuters survey.
Especially noteworthy are the exports to ASEAN and the European Union, which increased by over 8% and nearly 15% respectively.
Imports, on the other hand, grew by 1.9% year-on-year, lower than the market’s expected 3%, indicating that the continued slump in the real estate sector and employment uncertainty are dampening domestic consumption demand.
In addition to the sharp reduction in exports to the U.S., imports from the U.S. to China also decreased by 19% year-on-year.
French bank Natixis’ senior economist Gary Ng noted that despite the trade truce, the tariffs imposed by the U.S. on Chinese goods remain higher than those of many other countries. He also suggested that Chinese exporters may continue to ship goods to the U.S. through third countries. “This may become a new normal in the future,” Ng pointed out.
According to data from the Peterson Institute for International Economics, the average tariff imposed by the U.S. on Chinese goods remains at around 47.5%. In contrast, China levies tariffs of approximately 32% on imported U.S. goods.
After reaching a trade truce agreement in October, the U.S. and China agreed to gradually withdraw high tariffs on each other’s goods and relax export controls on key minerals and advanced technologies. At the same time, China pledged to buy more U.S. soybeans and cooperate with the U.S. in combating fentanyl smuggling.
In November, China’s rare earth exports accelerated, reaching 5,494 tons, a 24% increase from a year ago and higher than October’s 4,343.5 tons. There are reports that the Chinese Ministry of Commerce is designing a new rare earth licensing system to expedite related exports. However, China’s soybean imports in November totaled 8.1 million tons, a 13% increase year-on-year, but a decrease from October, indicating a slower pace in fulfilling the commitment to purchase 12 million tons of U.S. soybeans.
Manufacturing activity in China continued to be weak in November. Official manufacturing surveys showed that factory activity had contracted for eight consecutive months, with new orders still not recovering; a private survey of export enterprises also revealed an unexpected return to contraction in manufacturing activity.
Goldman Sachs estimates that China may need to expand the fiscal deficit ceiling, lower policy rates by 20 basis points, and strengthen stimulus measures to curb the decline in the property market.