Chinese Yuan Weakens Despite Exports Beating Market Forecasts

The  Chinese yuan is falling against several major currency competitors on  Tuesday, despite positive trade data that suggest the  US-China trade dispute winding down is proving already to  be bullish for  Beijing. The  December numbers are beginning to  roll in, and  so far, it is good news for  the  world’s second-largest economy.

According to  the  General Administration of  Customs, the  nation’s trade surplus diminished to  $46.79 billion last month, down from $56.8 billion in  the  same month a  year ago. It is also below the  median estimates of  $48 billion.
Exports expanded for  the  first time since July as  they surged 7.6% to  $237.65 billion in  December. The  market had penciled in  a  gain of  just 3.2%. Most of  China’s gains were situated in  coal and  refined products, but it did witness significant declines in  aluminum, steel, rare earths, and  rice.
Imports spiked 16.3% from the  same time a  year ago to  $190.86 billion, which is the  biggest number since October 2018. Analysts had anticipated an  increase of  9.6%. Beijing imported more copper, iron ore, crude oil, natural gas, soybeans, and rubber. It did buy smaller amounts of coal and steel.
Automobile sales reported a  major improvement from the  last couple of  years. Last month, vehicle sales fell just 0.1% to  2.66 million units, lifting the  12-month rate to  -8.2%. In  November, vehicle sales tumbled 3.6%. Investors had expected a  drop of  3%.
Next on  the  data front, gross domestic product, retail sales, and  financials will be released this week.
The  big news this week will be Vice Premier Liu He signing the  first phase of  a  comprehensive trade agreement in  Washington between the  US and  China. Full details of  the  pact will be released on  Wednesday, but we do know that China will be removed from the  Treasury Department’s list of  currency manipulations and  Beijing will acquire billions more in  US goods – and  not just agriculture.
Meanwhile, a  new Reuters poll of  economists says economic growth will slow to  a  30-year low of  5.9% this year.
The  USD/CNY currency pair advanced 0.11% to  6.9012, from an  opening of  6.8936, at  14:11 GMT on  Tuesday. The  EUR/CNY dipped 0.03% to  7.6759, from an  opening of  7.6785.

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