China August exports shrink as tariff war hurts US sales

Bloomberg

China’s exports unexpectedly contracted in August, with sales to the US tumbling amid the escalating trade war between the two nations.
Exports decreased 1 percent in dollar terms from a year earlier, while imports declined 5.6 percent, leaving a trade surplus of $34.84 billion, the customs administration said. Economists had forecast that exports would grow 2.2 percent, while imports would shrink by 6.4 percent. Shipments to the US fell 16 percent from a year earlier.
President Donald Trump’s administration raised tariffs on Chinese goods at the start of the month, and is set to ratchet up levies further in October and again in December if there is no breakthrough. China and the US will hold face-to-face trade negotiations in Washington in the coming weeks, after a rapid deterioration in relations last month left global investors
reeling amid increasing evidence the conflict is harming both nations.
“It’s bad on all fronts,” said Michael Every, head of Asia financial markets research at Rabobank in Hong Kong. “Add in the inevitable fall-off when US shipments finally catch up with 15 percent and 30 percent tariffs, and it’s an ugly picture.”
Weak exports add pressure on China’s already-slowing economy and point to an increased need for its policy makers to beef up stimulus measures. The central bank said it will cut the amount of cash banks must hold as reserves to the lowest level since 2007, injecting liquidity into the economy with the goal of stimulating demand.
China’s August trade surplus against the US was $26.95 billion. The decline in shipments to the US signals that the tariff escalation may have a bigger impact on exports, CICC analyst Liu Liu wrote in a note. China’s liquidity injection on Friday will help stabilise the growth rate of imports, CICC said.
The contraction came despite a persistent weakening of the yuan, and is evidence that exporters are not ‘‘front-loading’’ sales to try to beat oncoming higher tariffs. China has allowed the yuan to decline below 7 a dollar, prompting the US to name it a currency manipulator.

Mauritius to sign free trade pact with China
Bloomberg

Mauritius will sign a free trade agreement with China, it’s second biggest supplier, providing duty-free access
to the Asian market for 8,547 products, the PM’s Office said in a statement on its website.
The products represent “96 percent of the Chinese tariff lines,” the PMO said in a statement issued weekly following a cabinet meeting. Almost 90 percent of tariff lines will be eliminated immediately and the remaining ones removed over a five- to seven-year period. The agreement includes exports of 50,000 tons of specialty sugars at an in-quota rate of 15 percent to be phased over a period of eight years.