China: Slowdown fears propping up – ABN AMRO
Arjen van Dijkhuizen, senior economist at ABN AMRO, suggests that China’s export and import growth for December came in much weaker than expected, adding to fears of economic slowdown.
“The weakening of import growth not only relates to the slowdown of the Chinese economy. It also reflects slower export growth (as a large chunk of imports from global manufacturing hub China is export related), the fading of frontloading practices and last but not least the downward turn in commodity prices in the course of last year. Imports from the US were particularly weak (-36% yoy), with China’s bilateral surplus with the US still on a rising trend.”
“Looking ahead, we expect China’s economy to stabilise in the coming months, as we expect previous drags stemming from Beijing’s financial deleveraging campaign and the US trade and investment conflict to ease. Over the past months, the authorities have taken a wide range of fiscal and monetary easing measures to safeguard growth. Moreover, recent bilateral negotiations seem to indicate a somewhat higher probability of a short-term deal between the US and China, which would remove the risk of further import tariffs.”
“All in all, it may take a while before the full effects of easing policies and more positive trade negotiations will be felt in full.”