Global Economy Gets Ostensibly Positive News In China Tariff Headlines, South Korea Export Numbers

A smattering of ostensibly encouraging incremental news flow hit the tape first thing Monday in Asia.

Although it’s not entirely clear whether the headlines are specifically related to the fledgling “Phase One” deal between the US and China, Xinhua says Beijing is set to roll back tariffs on some 850 items, starting on January 1.

“China will adjust import tariffs for a range of products… to promote high-quality development of trade”, Xinhua reported, citing the Customs Tariff Commission.

The world’s second largest economy will increase imports of some consumer goods, Xinhua went on to say. Tariffs on some IT products will be cut from July 1.

Subsequent details show China is set to lower tariffs on frozen pork, avocado and orange juice, among other items. Once that tariff relief is in place, 859 total items will “enjoy” (as Bloomberg puts it) preferential import levies. Raw materials used in a handful of drugs will have no tariffs.

Again, this appears to be couched in broad terms. As usual, the announcement admits of more than a little ambiguity so as to be amenable to the general narrative that frames Xi’s “opening up” efforts as consistent with the country’s best interests, as opposed to the product of external pressure from the US, or anyone else for that matter.

In any event, the headlines are, at minimum, not bad news.

Perhaps more notable – at least in the near-term – is the relatively benign drop in South Korea’s first 20-day exports. First 20-day shipments fell just 2% YoY in December, a markedly better result than what investors have come to expect.

As you can see, the figure for December is a considerable improvement from the 9.6% drop during the first 20 days of November. Semi shipments continued to sputter, falling 16.7%, but exports to China actually rose 5.3%, an encouraging sign.

You’re reminded that exports for the whole of November fell 14.3%, the 12th consecutive monthly decline, and a bad miss to consensus. That was a bitter disappointment. Shipments to China tumbled 12.2% last month, a dubious encore after October’s near 17% decline.

Seen in that context, the benign drop during the first 20 days of December would appear to be particularly welcome news, although we don’t pretend to be offering anything other than a cursory assessment here.

All obligatory caveats aside, the above is a decent start to the news flow for what will likely be a week devoid of real catalysts, barring some kind of Christmas Eve Twitter meltdown akin to last year’s wholly absurd “he can’t putt!” moment.


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