Monica Mailk, chief economist at Abu Dhabi Commercial Bank, talks about China's latest trade numbers, and what the US-China truce struck last week means for the global economy going forward.

Shanghai

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

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China's latest trade data shows a decline in exports, raising concerns about the country's economic outlook amid ongoing trade uncertainties and the impact of tariffs. While some tariffs have been reduced following recent negotiations, the effects of earlier front-loaded exports and slowing U.S. growth are expected to become more pronounced toward the end of the year and into the next.

Economists note that government support remains crucial for sustaining global economic activity, with countries like Saudi Arabia maintaining spending despite lower revenues. Policymakers are now focusing on balancing fiscal sustainability with ongoing investment and diversification efforts as growth rates slow and funding pressures increase.

China exports decline in October: Economist explains tariff 'payback'

First of all let's just get a review of these China trade numbers. What is the macro story that those numbers are telling us at the end of the day. This is the world's second largest economy and many of the estimates were far off. Absolutely. Good morning Maneesha. So of course the first thing it raises concerns over the trade uncertainty and certainly the higher base has played an impact at this time. Last year we saw Donald Trump winning the election. Expectations of tariffs and strong production and export growth out of China and Asia to the rest of the world. But the sequential decline also highlights that also trick the fact that exports has been resilient. We now expect some degree of payback towards the end of the year and going into next year as U.S. growth slows and as inventories have been have built up. So more of the impact of the tariffs and the front loading is expected to be seen at the end of this year and going into next year. Monica Elaine you just pointed something out. Quite important of course that this was these numbers are will be on a time lag and they wouldn't have taken into account that meeting that momentous that meeting that we saw between President Xi Jinping and Donald Trump a week ago. Is there any any glimmer of hope from what we've heard from both sides there. I would say there's a glimmer of hope. There's still a lot of uncertainty. Most of the tariffs and the truce has been paused. There has been some reduction in the tariffs. But that said we still have the front loading of exports in the first eight months of the year. Maybe not directly between China and the U.S. and more through reshipments and re exports. So we do expect to pay back. But in another hopeful point compared to April and May the U.S. weighted trade tariffs are much lower than feared. We have seen a number of trade deals happening and the weighted tariffs for the U.S. by our estimate is closer to 12 percent. So still higher than the beginning of the year but much less feared in the second quarter of the year. But there still will be uncertainties. And of course from other policy uncertainties including in China with weak domestic economic activity and of course in the U.S. with the government shutdown as well. So Monica not wanting to get into our basic economics but of course that growth equation very much dominated by the consumption factor and a lot of that coming from government at the moment. So a lot of the fiscal input has been increasing across nations. We've seen this for example if we look at the Middle East and we look at Saudi Arabia. Let's just have a look at some of the numbers there. We've got to see this continue to be consistent right. Otherwise there's going to be cause for concern. Absolutely. And government support has been very important for economic activity. It's not just direct government support but also investment by the PIF in the in the large brick based investment drive that we're seeing to diversify the economy. At the end of last week we had the fiscal figures out of Saudi Arabia. And despite a sharp fall in government revenues on the back of the lower oil price and Iran co-dividends the performance led dividends you did see government spending remaining flat. And it really shows the focus of the government to support economic activity and their comfort at realizing larger deficits given the lower given the still low government debt levels. And so given I mean obviously there's the non-oil and the oil the non-oil activities in Saudi Arabia continue to grow at a solid pace in the second half second quarter of 2025. But it seems that that rate of expansion is actually getting narrow. It's decreasing. So so what do you think would be on the agenda in the mind of policymakers when it came to economic policy as we head out into 2026. Absolutely. And if we look at the latest flash GDP data while the year on year growth was very solid you did see slowing in the sequential growth. I think as we go forward it is really balancing the fiscal position with the diversification program and and the investment drive. We have seen also inside the Arabia increased signs of the rebalancing and the recalibration of the investment program. And ultimately we see that as very positive to reduce the fiscal pressures on the government and the spending pressures on the PIF. The investment program still remains large. And that includes linked to many events that Saudi Arabia is expected to host at the end of this decade and going into the next. But also the focus on more sectors and industries that will most likely be revenue generating. That also is positive. So we've reached a point where the funding pressures of the investment program is being a constraint and you're going to have a more balanced view between fiscal and growth objectives.

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China exports decline in October: Economist explains tariff 'payback'

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