China exports grow despite US tariffs, but imports slump most in nearly 3 years

China’s trade surplus with the United States, a major irritant for Washington, widened to a four-month high of $26.89 billion in May. (AFP)
Updated 10 June 2019

China exports grow despite US tariffs, but imports slump most in nearly 3 years

  • Chinese exporters may have rushed out shipments to the US to avoid new tariffs on $300 billion of goods
  • China’s trade surplus with the US, a major irritant for Washington, widened to a four-month high of $26.89 billion in May

BEIJING: China’s exports unexpectedly returned to growth in May despite higher US tariffs, but imports fell the most in nearly three years in a further sign of weak domestic demand that could prompt Beijing to step up stimulus measures.
Some analysts suspected Chinese exporters may have rushed out shipments to the United States to avoid new tariffs on $300 billion of goods that President Donald Trump is threatening to impose in a rapidly escalating trade dispute.
But Monday’s better-than-expected export data is unlikely to ease fears that a longer and costlier US-China trade war may no longer be avoidable, pushing the global economy toward recession.
China’s May exports rose 1.1 percent from a year earlier, compared with market expectations for a modest decline, customs data showed.
“We expect export growth to remain positive in June, likely supported by continued front-loading of US-bound exports, but it should then tumble in the third quarter, when we expect the threatened tariffs to be imposed,” economists at Nomura said in a note to clients.
“Therefore, we believe Beijing will likely step up its stimulus measures to stabilize financial markets and growth.”
Business distortions related to April’s cut in the value-added tax (VAT) may also have eased, helping export readings, Nomura added.
Analysts polled by Reuters had expected May shipments from the world’s largest exporter to have fallen 3.8 percent from a year earlier, after a contraction of 2.7 percent in April.
While China is not as dependent on exports as in the past, they still account for nearly a fifth of its gross domestic product.
Trade tensions between Washington and Beijing escalated sharply last month after the Trump administration accused China of having “reneged” on promises to make structural changes to its economic practices.
Trump on May 10 slapped higher tariffs of up to 25 percent on $200 billion of Chinese goods and then took steps to levy duties on all remaining $300 billion Chinese imports. Beijing retaliated with tariff hikes on US goods.
Trump has said he expects to hold a meeting with Chinese President Xi Jinping at a G20 leaders’ summit late this month, but analysts believe the chances of a lasting trade deal are receding as both sides appear to be digging in for a long battle.
China’s trade surplus with the United States, a major irritant for Washington, widened to a four-month high of $26.89 billion in May, from $21.01 billion in April, Monday’s data showed.
Exports to the US fell at a more moderate pace of 4.2 percent after dropping 13.2 percent in April, while China’s imports of US goods declined 26.8 percent from a year earlier.
China’s May imports were much weaker than expected, falling 8.5 percent, the sharpest drop since July 2016. That left the country with a trade surplus of $41.65 billion for the month.


New emissions blow for VW as German court backs damages claims

Updated 26 May 2020

New emissions blow for VW as German court backs damages claims

  • Scandal has already cost firm more than €30 billion; ruling serves as template for about 60,000 cases

KARLSRUHE, Germany: Volkswagen must pay compensation to owners of vehicles with rigged diesel engines in Germany, a court ruled on Monday, dealing a fresh blow to the automaker almost 5 years after its emissions scandal erupted.

The ruling by Germany’s highest court for civil disputes, which will allow owners to return vehicles for a partial refund of the purchase price, serves as a template for about 60,000 lawsuits that are still pending with lower German courts.

Volkswagen admitted in September 2015 to cheating in emissions tests on diesel engines, a scandal which has already cost it more than €30 billion ($33 billion) in regulatory fines and vehicle refits, mostly in the US.

US authorities banned the affected cars after the cheat software was discovered, triggering claims for compensation.

But in Europe vehicles remained on the roads, leading Volkswagen to argue compensation claims there were without merit. European authorities instead forced the company to update its engine control software and fined it for fraud and administrative lapses.

Volkswagen said on Monday it would work urgently with motorists on an agreement that would see them hold on to the vehicles for a one-off compensation payment.

It did not give an estimate of how much the ruling by the German federal court, the Bundesgerichtshof (BGH), might cost it.

Volkswagen shares were 0.5 percent lower. The BGH’s presiding judge had signaled earlier this month he saw grounds for compensation.

Costs mount

“The verdict by the BGH draws a final line. It creates clarity on the BGH’s views on the underlying questions in the diesel proceedings for most of the 60,000 cases still pending,” Volkswagen said.

A lower court in the city of Koblenz had previously ruled the owner of a VW Sharan minivan had suffered pre-meditated damage, entitling him to reimbursement minus a discount for the mileage the motorist had already
benefited from.

The court at the time said he should be awarded €25,600 for the used-car purchase he made for €31,500 in 2014.

“We have in principle confirmed the verdict from the Koblenz upper regional court,” said BGH presiding federal judge Stephan Seiters.

Volkswagen had petitioned for the ruling to be quashed altogether by the higher court, while the plaintiff had appealed to have the deduction removed.

A Volkswagen spokesman said that outside Germany, more than 100,000 claims for damages were still pending, of which 90,000 cases were in Britain.

The carmaker also said it had paid out a total of €750 million to more than 200,000 separate claimants in Germany who had opted against individual claims and instead joined a class action lawsuit brought by a German consumer group.

The carmaker said last month it would set aside a total of 830 million for that deal.

In a separate court, Volkswagen agreed last week to pay €9 million to end proceedings against its chairman and chief executive, who were accused of withholding market-moving information before the emissions scandal came to light.