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China’s exports soared in October and its trade surplus ballooned, official data showed on Thursday, just days after Donald Trump won the US presidential election with promises of sweeping tariffs to suppress imports from China.
President Xi Jinping called Trump on Thursday to congratulate him on his electoral victory, according to Chinese state news agency Xinhua. Xi told Trump the world’s two largest powers would “benefit from co-operation and suffer from confrontation”, it reported.
But the bumper export figures are expected to inflame tensions between Trump’s incoming administration and Beijing, which could respond to aggressive new tariffs with bigger stimulus action and a sharp depreciation of the renminbi, said analysts and bankers. China’s central bank set its official exchange rate against the dollar on Thursday at the lowest level in a year.
The October export surge was probably partly because “the prospect of a Trump victory” and anticipated tariffs spurred exporters to front-load shipments, said Shuang Ding, head of greater China economic research at Standard Chartered.
Exports from China in dollar terms rose 12.7 per cent year on year in October, exceeding an average analyst forecast of 5 per cent according to Bloomberg and a gain of 2.4 per cent in September.
Imports declined 2.3 per cent last month, bigger than a Bloomberg forecast of a 2 per cent fall and 0.3 per cent growth in September.
Trade between China and the US was more subdued than the headline figures but still showed strong growth. Exports rose 8.1 per cent in October, while China’s imports from the US climbed 6.6 per cent.
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Analysts said China’s burgeoning trade surplus — which hit $95.7bn in October compared with forecasts of $75bn — would provoke Trump.
“Of course China will be on top of the list,” said Wang Dong, a professor at Peking University. “The stability, the relative improvement that we have been witnessing . . . will probably come to an end.”
The former president has threatened to impose 60 per cent tariffs on Chinese goods, which analysts said could spur Communist party leaders, who have been reluctant to embark on a wholesale fiscal stimulus, into more determined action to boost the economy.
Chinese lawmakers are expected on Friday to unveil a fiscal package that will include debt swaps for troubled local governments and potentially more stimulus.
A Trump win “is not necessarily bad for China as this may ‘pressure’ Beijing [to implement] a bigger stimulus”, Qi Wang, chief investment officer for wealth management at UOB Kay Hian, wrote in a note.
But analysts do not anticipate a spending “bazooka” to prop up lagging household demand, which has been hit by a prolonged property slowdown.
The size of the stimulus will depend on Trump’s tariffs, experts said. Analysts had previously estimated that Beijing would need to spend Rmb10tn ($1.4tn) on stimulus directly targeting households, rather than Chinese policymakers’ preferred tools of infrastructure investment and local government refinancing.
Ma Wei, associate researcher at the Chinese Academy of Social Sciences, a government think-tank in Beijing, said policymakers would probably wait until December or January to announce additional measures. China’s Communist party leadership will hold their annual Central Economic Work Conference in December.
Analysts said Beijing could offset US tariffs by allowing a steeper depreciation of the renminbi. The currency’s fixed rate of Rmb7.166 a dollar on Thursday marked its sharpest one-day weakening since April 2022 and came after it tumbled 1 per cent against the dollar on Wednesday.
“China can use the renminbi as a weapon to weaken the exchange rate to gain a trading advantage in a high tariff environment,” said Hong Hao, partner and chief economist at GROW Investment Group, adding that he expected China’s currency to “depreciate big time”.
But this strategy could be undermined if Trump’s tariffs revive inflation in the US and lead to interest rate rises, threatening an over-depreciation of the renminbi, said Hong.
Additional reporting by William Sandlund in Hong Kong and Wenjie Ding in Beijing