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Economist Mohamed El-Erian warned of “significant challenges” for Xi Jinping’s growth model after fresh data showed a sharp drop in US-China trade.
The analysis follows a CNBC report that Chinese exports to the U.S. plunged 33% in August year-over-year, a development El-Erian said shows U.S. tariffs have begun to “bite.”
The sharp decline in U.S.-bound shipments was the primary factor limiting China’s overall export growth to a six-month low of 4.4% in August, a figure that fell short of consensus forecasts.
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In a post on the social media platform X, El-Erian also highlighted that imports from the U.S. dropped by 16%, restricting China’s total import growth to just 1.3%, which was also “worse than the consensus expectation.”
“These numbers, none of which bode well for a Chinese economy already facing significant challenges, highlight the urgent need for more concerted government efforts aimed at reforming the country’s growth model,” El-Erian stated in his post.
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The August trade figures, released by Chinese customs, signal that the impact of exporters’ “frontloading” shipments to get ahead of tariffs is fading.
The slowdown is also attributed to a U.S. crackdown on the transshipment of goods through third countries to sidestep the duties.
This downturn follows a July report from the U.S. Census Bureau and U.S. Bureau of Economic Analysis, which showed the American trade deficit in goods with China had widened by $5.3 billion to $14.7 billion for that month.
While its trade with Washington falters, Beijing has increasingly turned to other partners. In August, China’s shipments to the European Union and Africa surged by 10.4% and nearly 26%, respectively. Despite the steep decline, the U.S. remains China’s largest single-country export destination.
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This article Trump’s Tariffs ‘Bite’ China As Trade With US Sees ‘Substantial Contraction,’ El-Erian Warns Of ‘Significant Challenges’ To Xi Jinping’s Growth Plan originally appeared on Benzinga.com
