Chinese exporters said business weakened further in April, with the growth of volumes and values slowing again and more companies turning negative on the immediate outlook.
Our survey was conducted as hope increased that the US and China would cobble together a deal to allow both parties to put aside at least some of the issues dogging their bilateral relationship.
Although trade actions and tough talk by the Trump administration appear to have hurt Chinese business and consumer sentiment, exporters say they are having less direct impact on their business with every passing month.
The number of companies saying the dispute was having a negative impact fell again in April — less than a fifth of firms now say it is hurting — while just 12 per cent of respondents said they were not taking action to counteract the dispute (selling into new markets was again the most popular countermeasure, cited by 31 per cent of respondents).
Despite the gloomy headlines, Chinese exports delivered near-consistent upside surprises, helped by US demand. China’s goods exports to the US have grown faster than China’s overall export growth for 22 of the 28 months since Donald Trump was elected president.
While there is still a chance of failure, markets are betting the two countries will be able to agree a resolution, possibly in May. Talks continue in Beijing this week and more are scheduled in Washington next week, as the two sides work towards a deal to be signed by Presidents Xi and Trump at a yet-to-be-agreed summit meeting.
Among respondents to our April survey, 28 per cent said they expected a deal to be done in the first half of the year, while another 45 per cent believed it would be concluded by year-end.
However, more than 11 per cent of companies said the trade dispute was a permanent feature of the bilateral relationship and would not end.
Our latest survey of 200 export manufacturers, trading companies and shipping agents points to a gradual erosion of operating conditions. The results suggest export profits grew more slowly in April, while just 2 per cent of respondents said they expected business to improve next month (94.1 per cent expected a continuance of current conditions).
This is a far cry from the volatility seen in 2015 and 2016, when Chinese trade slumped violently after a stock market crash and botched currency devaluation fuelled concerns about a hard economic landing. However, taking an average of January-April readings, this has been the weakest start to a year since 2016.
FT Confidential Research is an independent research service from the Financial Times, providing in-depth analysis of and statistical insight into China and south-east Asia. Our team of researchers in these key markets combine findings from our proprietary surveys with on-the-ground research to provide predictive analysis for investors.