US Tariffs and the Impact on China – A Few Warning Signs

China's foreign trade had a better-than-expected performance in October. Exports grew 15.6% year on year in dollar terms，exceeding the strong September growth tally of 14.5%. Imports rose 21.4%，up from 14.3% in September. China's exports to the US defied the escalating Sino-US trade dispute，climbing 13.3% year-on-year. The US result in October topped the performance for exports to the European Union and Japan，which rose 12% and 8.5%，respectively. It also exceeded the 11.2% increase for overall exports in the same month last year.

Yet the prospects are not so encouraging if we look at forward-looking indicators. The figure for new export orders，a sub-index of the Purchasing Manager's Index (PMI)，was just 46.9 in October. It was the fourth month in a row since July in which the index was below the 50 threshold which separates contraction from expansion. Another pessimistic sign was the decreased cumulative export turnover at the 124th Canton Trade Fair. The big fair concluded with nearly US$30 billion in export orders，down 1% from the autumn fair last year. Orders from the US saw an especially large decline，with the volume of transactions falling by 30% from a year earlier to only $2.79 billion. These signs indicate future trade risks that cannot be underestimated.

To determine the extent of trade risks from the US tariffs，we examined three