China’s exports have plummeted in March 2018, shocking market spectators that were expecting a significant rise. Furthermore, the beginning trade war between China and the USA unsettles investors, which lead to a historical low investment activity between the two countries.
The exports of China have decreased in March 2018, falling behind the expectations. According to official Customs data, China’s exports in March were decreasing by 2.7% in dollar-value compared to the same month in previous year. This result is surprising market participants that expected an increase in exports by more than 10%.
Due to the shrinking exports, the Chinese trade balance was showing a trade deficit, a situation that last time happened in February 2017.
Despite the trade war that is being fought against China and the USA, the trade imbalance between the two countries, one of the big issues President Donald Trump is complaining about, was even growing by almost 20% in the first quarter of 2018, compared to the same period 2017. The reason for this development can be found in the higher growing exports of Chinese products to the USA (14.8%), compared to the slower growth of American products to China (8.9%).
Trump is handling the trade imbalance with his protectionism policy, which is slapping high tariffs on a growing number of Chinese products. China is responding with its own tariffs on American imports, ready to fight for its interest in a free trade environment.
Investments are decreasing as well
The amount of investments between China and the USA has witnessed a significant decrease in 2017, due to the lack of Chinese investments in the USA, which decreased from 2016 to 2017 by about USD17 billion. On the other side, investments of American companies in China have remained stable in the past year, but still way below the counterpart investments.
According to several trade experts, 2018 might see a continued decrease in investments between the two biggest economies in the world. The first two months of 2018 showed a historical low investment activity and few plans for further investment have been released yet. The reason can be found in the insincerity of companies concerning the threatening trade war between the USA and China, which is keeping investors in a wait-and-see position.
In March, Donald Trump had revealed to devise plans to stem Chinese investment in strategic areas for the future. The Congress is also working to extend the powers of the Committee on Foreign Investment in the USA, which is investigating and potentially blocking foreign investment in the USA.
In addition to more blockades of participation or takeover attempts by the USA, the decline last year is also due to restrictions imposed by the Chinese government on foreign investment in order to prevent capital outflows from the country.
China’s trade data
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