News ID: 232656
Published: 0250 GMT October 12, 2018

US tariffs loom at China's biggest trade fair

US tariffs loom at China's biggest trade fair
Visitors attend the China Import and Export Fair, also known as Canton Fair, in the southern city of Guangzhou, China, on April 16, 2018.

Amid gathering gloom over the state of the Chinese economy, exporters of motorcycles, tractors, photocopiers and Christmas tree lighting will join thousands of other companies peddling their wares at China’s largest trade fair Monday.

Many of those exporters will have something in common – uncertainty over future US orders as a trade war with the United States rages. The turmoil has added to concerns over the health of the Chinese economy, already under pressure from a cooling property market, a crackdown on corporate debt and risky lending practices, and a nationwide anti-pollution campaign, Reuters reported.

The United States over the summer levied tariffs of up to 25 percent on $250 billion of Chinese goods as punishment for what it says are unfair trade practices by China. The latest tariff salvo represented half of the $500 billion of products that the United States bought from China last year.

The rapid escalation of the trade dispute has taken many Chinese exporters by surprise. At the spring session of the twice-a-year Canton Fair in Guangzhou, only a quarter of the exporters whom Reuters spoke to said they expected a full-blown trade war.

As exporters gather at the autumn session of the three-week gathering that starts Monday, a far more somber outlook is expected to pervade the tens of thousands of exhibition booths at the fair.

US President Donald Trump has repeatedly threatened to slap tariffs on more Chinese imports in an intensifying trade war that has led many forecasters, including the International Monetary Fund, to cut their global economic projections for 2018 and 2019.

Beijing has been urging Chinese exporters to diversify their overseas destinations and rely less on the United States – China’s biggest trading partner – or turn their focus to domestic customers instead.

“Our existing US orders are relatively stable, but our US clients are not increasing their orders,” said an official at a Guangzhou-based battery maker, one of many facing higher US tariffs on Chinese batteries.

“We’re keeping prices stable and swallowing the tariffs ourselves,” the official said.

As export-reliant cities and provinces like Guangdong show the strain, policymakers are increasingly rolling out measures to help businesses weather the trade storm.

The central bank has cut the amount of cash that commercial banks need to set aside as reserves four times this year to spur lending to small businesses. The Finance Ministry has reduced taxes and increased tax rebates to help lower the overheads of businesses. Billion-dollar infrastructure projects have been put on the fast track to stimulate growth.

The authorities, while saying they will not resort to competitive devaluation of China's currency to boost exports, have allowed the yuan CNY=CFXS to fall about 6 percent against the dollar this year.

Overall Chinese exports have been mostly resilient, with data Friday showing that September shipments soared 14.5 percent year-on-year, far exceeding expectations for an 8.9 percent uptick.

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