(Bloomberg) -- China's exports unexpectedly contracted in August with sales to the U.S. shrinking by 16% from a year earlier, as the trade war between the two nations escalates.
Exports decreased 1% in dollar terms from a year earlier, while imports declined 5.6%, leaving a trade surplus of $34.84 billion, the customs administration said Sunday. Economists had forecast that exports would grow 2.2% while imports would shrink by 6.4%.
The contraction comes despite a persistent weakening of the yuan, and is also evidence that exporters are not ''front-loading'' sales to try to beat oncoming higher tariffsWeak exports add pressure on China's already-slowing economy and point to an increased need for Chinese policy makers to beef up stimulus measures China and the U.S. announced that face-to-face negotiations will take place in the coming weeks in the wake of a renewed ramp-up of tariffs, raised by both sides on Sept. 1. The U.S. plans to add more on Oct. 1, and then both nations will increase them again on Dec. 15 unless there is a breakthrough. "We continue to expect no trade deal in 2019 and even 2020 in our base case, and see the risk of further trade war escalation", Wang Tao, chief China economist at UBS AG, wrote in a note. The latest escalation of 5 percentage point higher tariffs on almost all Chinese goods will lead to another 0.3 percentage point drag on China's gross domestic product growth over a 12-month period, on top of the bank's previous downgrade to 5.8% GDP growth in 2020, she wrote.
China's August trade surplus against the U.S. was $26.95 billion
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