SHANGHAI –Chinese exports jumped a bigger-than-expected 7.9 percent in January, delivering a dose of optimism amid fears of U.S. President Donald Trump’s protectionist threats against the country.
Exports of Chinese merchandise jumped 7.9 percent in January, according to press reports. China’s trade surplus reportedly widened to $51.35 billion, its highest level since August.
Trump has taken an antagonist approach to China, threatening to slap a 45 percent tariff on all imports from the country and sparking fears of a trade war between China and the United States. But there are signs he might be softening his approach.
Trump reportedly spoke with Chinese President Xi Jinping Thursday evening over the phone and said the United States is committed to honoring the ‘One China’ policy that considers Taiwan part of China. Such a move represents a dramatic reversal of Trump’s earlier stance- back in December Trump said he might not respect the decades-old protocol, prompting a harsh rebuke from China state-run media.
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Alicia Garcia Herrero, chief economist for the Asia-Pacific region at Natixis and senior research fellow at Bruegel, said the numbers are cause for optimism.
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“I am positive on trade figures for the whole year since the US and EU are recovering and the yuan has lost nearly 10 percent against trading partners so China has gained some competitiveness,” she said.
Looking forward to the rest of the year, the depreciating yuan could also have knock on effects for the domestic economy.
“You are going to see a lot more purchases in China of fashion items as Chinese consumers are much more interested in shopping in China. This is being driven because the yuan is depreciating, so Chinese consumers want to shop in China rather than overseas, secondly because they are scared of travelling to the EU because of terrorism fears and refugee crisis, and thirdly because companies are equalizing their prices”, said Shaun Rein, founder of China Market Research Group.
“People are quite concerned about the political tension between Trump and China, but also the leadership change coming up in China next year. The anti-corruption crackdown is continuing and putting a dampener on spending and hurting confidence. Consumers confidence is weakening China, but this is making spending go up as instead of going abroad Chinese consumers are staying in China,” Rein said.