Escalating trade war will make China's trade situation worse - ING

Iris Pang, the economist for Greater China at ING, notes that China's exports contracted 2.7% yoy in April while its imports enjoyed a rise of 4.0% yoy. According to her, these numbers reflect the negative outlook for smart devices and automobile sales globally, and at the same show that China is importing more crude oil for domestic use.  Pang also adds that she is not particularly optimistic on China's export and import data in coming months.

• First, the escalation of the trade war means it is likely there will be more tariffs imposed on China's exports, and China's retaliation means more expensive imported goods from the US. So both China's exports and imports will be hit. 
• Second, the structural change in smart devices and automobiles will continue. Consumers have been delaying purchases of new smart devices because of a lack of new technology and as they await the rollout of 5G. For automobiles, ride-hailing apps globally, especially in China, have reduced demand for cars. Unless there are big improvements in the convenience of driving and charging a new energy car or even mass production of driverless cars, we believe this structural change in private cars will continue.
• Third, if the trade dispute escalates further, we expect the US to push even harder on its Western allies not to use China-made 5G products and parts, which will dampen China's future exports.