Sun, 05 Apr 2020

BEIJING, China - The introduction of trade tariffs on Chinese-manufactured goods by the Trump administration has done little to address the huge trade surplus China enjoys over the United States.

In fact, according to figures released on Monday, the surplus last year was the largest in history, or at least since 2006 when records began to be calculated and recorded.

The surplus in 2018 increased by a massive 17.2% to $323.32 billion.

The difficulty for the U.S. president is that when he imposes tariffs on China, the reverse happens and noone wins. The strategy of returning the world to trade protection, at least on the results so far, indicate it is not the way to go.

Dialogue with Beijing, rather than a trade war, is likely to yield more positive results.

The surplus was one bit of good news for the Chinese economy released on Monday. However more disturbing for China was a dframatic fall in exports last month. December exports declined by 4.4% compared to the same month last year, the lowest reading in two years.

The market was geared up for a fall in numbers due to widespread publicity over Apple's cut back in iPhones production however the number was far worse than analysts expected.

The concern for the Chinese economy translates into a wider concern for the global economy, because of the sheer size of China's economy, the second largest in the world.

"Today's data reflect an end to export front-loading and the start of payback effects, while the global slowdown could also weigh on China's exports," Nomura economists said in a note to client, according to the Reuters news agency.

"The export growth print also suggests that the recent strength of the yuan might be short-lived; Beijing will perhaps be more eager to strike a trade deal with the U.S.; and that policymakers will need to take more aggressive measures to stabilize GDP growth."

Shares in China on Monday fell as the news on the fall in exports broke broke. The Shanghai Composite lost 0.71% of its value. The Hong Kong Hang Seng did worse, declining 1.38%.

Elsewhere in the region however, China's woes were shrugged off. In Tokyo, the Nikkei 225 gained 0.97%, while the Australian All Ords was up 0.03%.

By Tuesday markets had recovered. In China, the Shanghai Composite, closed up 34.58 points or 1.36% at 2,570.34.

In Hong Kong, the Hang Seng on Tuesday was up an impressive 531.95 points or 2.02% at 26,830.29.





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