By SPECIAL TO THE NATION
For China, last year’s export receipts in fact saw their strongest gains in seven years, rising 9.9 per cent from a year earlier.
The recent US-China truce agreement has put on hold the expected tariff increases until the end of February, giving time for both countries to negotiate a trade deal. The ongoing trade negotiation seemed to yield significant progress. According the US President Trump’s tweet, the mid-level talks in Beijing last week went “very well” and he thinks, “we are going to be able to do a deal with China”.
So is it time to sound the all-clear and put trade war worries behind us?
Not so fast. The strong export figures last year were driven partly by the so-called “front-loading” efforts, in which exporters brought forward shipments to avoid the upcoming tariff increase. Anecdotal evidence from manufacturers, cargo ships and warehouses suggests that companies in the US were front-loading their orders from China ahead of the additional 25 per cent tariffs, which were expected to become effective on January 1, 2019.
But the recent agreement in the US-China trade truce that put on hold the tariff increase has taken away that sense of urgency. As a result, exports from China saw a sharp 4.4 per cent drop in December last year, the weakest reading since December 2016. Exports to the US fell 3.5 per cent, while imports from the US slumped a huge 36 per cent.
Regardless of the outcome of the US-China trade negotiations, global trade is poised to slow down significantly in 2019.
Thailand, as a small and open economy that is deeply integrated into China’s supply chain, will inevitably bear the brunt of such a slowdown in global demand.
KOMSORN PRAKOBPHOL is head of the Tisco Economic Strategy Unit.