Category Archives: Trade

Canton Fair down in numbers, up in spirits

The country’s biggest trade fair wrapped up this week with disappointing numbers but buoyant hopes for an upturn, according to local media. This was for two reasons: the US-China trade talks appeared to be edging toward an agreement that could see tariffs start to be lifted; and there had been a surge in orders from Asean countries, i.e., the Belt and Road Initiative appears to be working.

Nothing could dampen the mood of the fair’s irrepressible spokesperson, Xu Bing, deputy director of the China Foreign Trade Centre, who pointed out that although orders were down 1.9% in comparison to last year’s Fall session, they were up from the Spring session held earlier this year: RMB 207.09 billion vs RMB 199.5 billion.

Moreover, although attendance of 186,000 was the lowest since 2017, the 2% decline was less than the 3.9% year-over-year drop at the Spring session.

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Shenzhen’s exports hold up

As trade negotiators from the US and China work hard to polish their latest agreement, Shenzhen is providing the Chinese side with confidence. The country’s top technology export machine is doing okay. 

Despite a slowdown in trade with its largest traditional trading partner, it would seem that exports to the EU and countries along the Belt and Road Initiative are keeping the engines going in Shenzhen. Exports for the first three quarters are RMB 1.2 trillion, up 4.8% YoY. 

Overall trade with the EU during this period was up 15.5%. BRI countries came next, at +5.7%. ASEAN countries were up just +2.7%. 

Private enterprises continued to lead the way, up 5.1%, accounting for 57.7% of total trade. This drove the foreign trade growth of the entire city by 2.7 percentage points.

Highlights included electric motorcycles and bicycles. Shenzhen exported 2.471 million of them in the first three quarters, up 54.4%, while their value was RMB 2.21 billion, up 83%.

Import were boosted by agricultural products: Imports of fresh and dried fruits and nuts rose 19.5%; meat by 40.3%; and aquatic and marine products by 28.9%.

Dongguan cross-border e-commerce surges

Since being designated a national-level pilot zone for cross-border e-commerce just over a year ago, Dongguan has seen its international online trading business take off. According to official data, total cross-border e-commerce trade in Dongguan hit RMB 37.01 billion in 2018, more than double (+113%) 2017’s total.

It was only in July last year that Dongguan was formally approved as a national cross-border e-commerce “comprehensive pilot zone”, giving it some additional relief from red tape. That was after just five years of development, which involved developing trading systems, customs clearance supervision, and construction of special bonded parks. 

This year, the trend has continued, despite the slowdown in the external trade environment. Official data shows that in the first eight months of this year, the city’s e-commerce trade volume was RMB 26.97 billion, up 12.0%.

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Zhongshan and Jiangmen post weak trade data

Two of the Greater Bay’s western cities have posted weak trade numbers for the year to date, with Zhongshan slowing in September while neighboring Jiangmen continues to struggle.

Official data shows Zhongshan’s total foreign trade from January to September 2019 at RMB 181.55 billion, up 5.3% compared with the same period of last year. Exports were strong at RMB 146.84 billion, up 11.1%, but imports fell 13.7% to RMB 34.71 billion. 

These numbers were a deceleration, however. In September alone, the import and export value of Zhongshan was RMB 19.5 billion, down 5.1%. Exports were RMB 15.89 billion, up 0.2%, and imports were RMB 3.61 billion RMB, down 23.1%. 

Explanations focused on the drop in trade with the US, which was being slowly replaced by trade with Belt and Road Initiative countries.

In Jiangmen, the picture was one of a more constant decline over the same period. Total trade in the year to date was RMB 105.4 billion, decreasing 1.9% compared with the same period last year. Exports totaled 84.19 billion RMB, up 2.2%; imports were RMB 21.21 billion RMB, down 15.6%.

Jiangmen’s trade with BRI countries was also picking up slowly, up just 0.9%, but trade with the EU was holding up, at +7.6%, while ASEAN trade grew 5.4%

Canton Fair focuses on Belt and Road

The semi-annual Canton Fair started its Fall session last week, and all indications are that business volumes are not dropping, so far. Exhibitor numbers and floorspace covered are up. Although it is too early to release visitor numbers, feedback from attendees, as reported by local media, is generally cautious but optimistic, with particular focus on trade with countries along the Belt and Road Initiative. 

Discussion of the US-China trade war was mostly avoided, although officials cast an optimistic tone. Xu Bing, spokesman for the fair, told local reporters that it was expected that US purchasers will “remain stable”.

Xu pointed to recent news suggesting that US-China trade negotiations were making progress, which, he said, will raise the expectations of foreign buyers. “We expect US buyers to remain stable and still be one of the top three foreign buyers in the Canton Fair,” he said.

Around 25,000 exhibitors set up displays on the opening day last week (the fair runs for three weeks). There were 60,676 booths covering more than 1.19 million sq ft. All these numbers were slightly up on the Spring session, organizers said.

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US-China deal edges closer as Huawei gets a break

Markets were buoyant today as speculation rose that a US-China trade deal was imminent

No deal was done by the time everyone went to bed in Washington, but the US president had made some encouraging suggestions earlier in the day that they were close.

That followed a New York Times report that the US government plans to soon issue licenses allowing some American companies to supply “nonsensitive goods” to Huawei Technologies. In a meeting last week, President Trump gave the green light to begin approving the licenses, which will allow a select few American companies to bypass a ban placed on Huawei this year.

EU boosts Shenzhen exports, up 11%

The US-China trade war appears to be a diminishing concern for city leaders in Shenzhen, judging by the latest data from the city’s Customs department.

According to the Shenzhen Daily, in August, Shenzhen’s exports shot up 11.1% YoY, bringing its total for the first eight months to RMB 1.4 trillion, up 5.5%. Driving this was trade with the EU and countries along the Belt and Road Initiative. Although it is now standard practice in mainland media reports to not mention trade with the US, the data shows trade with the EU came in at RMB 28.93 billion in August, up a healthy 25.2% YoY. Countries along the Belt and Road Initiative were RMB 58.37 billion, up 9.2% YoY.

Export tax rebates appear to have helped, as exports of Christmas products and ceramic products increased by more than 80%, while household electrical appliances rose by more than 20%.

Private enterprises continued to take market share from SOEs. In August, the split went to 60/40, up 3.6 percentage points from July.

Food held up the import numbers. In August, agricultural products rose 17.1%. Fresh fruits and nuts, meat and chop, seawater products and other consumer products increased by more than 20%.

Guangdong trade holds steady

August trade data is in for Guangdong, and it is not looking too shabby. According to official numbers reported by Nanfang Daily, exports remained in positive territory  at +1.23% YoY, and even picked up from the low growth point seen in July of +0.5%. Imports were still weak, but the pace of the drop, at -8.4%, was an improvement on July’s -12.7%. 

We had been intuitively expecting worse, given the China macro data released last week showing industrial production had slowed sharply in August. We still don’t have that data for Guangdong, so we cannot make comparisons yet. Moreover, in issuing these trade numbers, it seems like Guangdong has jumped the gun on the custodians of the national accounts, because China’s trade data for August isn’t out yet. 

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US-China standoff takes toll on August data

We will need to wait awhile for provincial data to follow, but it would not be surprising if Guangdong takes the national lead in showing weakness during August. Data for China’s trade released over the weekend showed an unexpected drop in exports and imports, as the trade war continues to bite.

Analysts quoted by Reuters said it was clearly the result of a weaker than expected external environment, and came despite the devaluation of the Renminbi. 

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Guangdong keeps exports up, again

While Hong Kong’s trade numbers deteriorate amid a worsening global economy, Guangdong’s are staying in positive territory. Could this be due to relocation of production of older industries from the province to countries in Southeast Asia, particularly Vietnam? It is hard to tell from the latest data, but it is a plausible theory.

Guangdong’s trade with ASEAN members (including Vietnam) rose 5.3% in the first seven months of the year. At RMB524.91 billion, it now accounts for 13.5% of Guangdong’s total foreign trade. However, the province’s resilience in the face of the US-China trade war is not only showing up in the nearby region. Trade with the European Union – hardly a low-cost processing center –  rose 12.7% in the first seven months. At RMB487.66 billion, it now accounts for 12.6% of Guangdong’s total foreign trade.

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