2nd largest economy China's exports fall ahead of crucial trade talks with USA

Beijing/ Washington: China's exports fell more than expected in April while imports rose, official data showed Wednesday ahead of high-stakes talks aimed at resolving a trade war with the United States. The world's two leading economies face a possible make-or-break moment when top negotiators meet in Washington this week following months of fraught talks.

US President Donald Trump has upped the ante with plans to more than double tariffs on USD 200 billion in Chinese goods on Friday, the last day of a two-day visit by President Xi Jinping's point man Vice Premier Liu He.

The trade war has battered shipments between the economic giants. In April China's exports across the Pacific fell 13.2 percent from a year earlier, while imports from the US fell 25.7 percent, according to the data from China's customs administration. The politically sensitive trade surplus with the US remained large, widening to USD 21 billion last month from USD 20.5 billion in March. Last year it hit a record USD 323.3 billion.

Global markets have taken a beating this week as investors grow increasingly concerned that the China-US trade deal, which last week appeared all but ready to sign, could fall through. US negotiators accused Beijing of reneging on commitments made during months of talks focusing on clamping down on theft of US technology and reducing China's massive subsidies.

"If Trump's threat becomes reality, it will be a game changer for the global economy," said Steve Cochrane, chief APAC economist at Moody's Analytics, adding the worst-case scenario would result in a US recession and a rapid reduction of growth in China.

Tepid global demand for China's goods have heightened the risk for Beijing, which posted 6.4 percent economic growth in the first quarter, having decelerated every quarter last year. China's exports to the world sank 2.7 percent on-year last month while imports rose 4.0 percent, producing a trade surplus of 13.8 billion.

Meanwhile, Chinese direct investment in the United States dropped 83 per cent last year, pushed down by growing mistrust between the world's two biggest economies.

In a report out Wednesday, the Rhodium Group research firm said that China sank USD 5 billion last year into direct investments in America, down from USD 29 billion in 2017 and a record USD 46 billion in 2016. Direct investments include things like putting up factories, not financial investments like buying stocks.

The numbers fell partly because Beijing sought to rein in deeply indebted investors and partly because the U.S. regulators have stepped up scrutiny of Chinese investments.

Rhodium estimates that China dropped deals worth USD 2.5 billion last year because they wouldn't pass muster with the Committee on Foreign Investment in the United States, which reviews foreign investments with national security implications.

Chinese investment in the U.S. information and communications technology industry plunged to $200 million last year from $2.5 billion in 2017. US direct investment in China, meanwhile, dipped to $13 billion from $14 billion in 2017. US investment in the Chinese IT industry dropped to

$2.1 billion last year from $4.1 billion in 2017 and $4.3 billion in 2016.