China’s Export and Import Declines Slow Down in August, but Growth Still Falls Short
BEIJING, Sept 7 – China’s exports and imports continued to decline in August, reflecting the impact of reduced overseas demand and weakened consumer spending within the nation. However, the rate of decline was slower than expected, offering a glimmer of hope for a possible stabilization in China’s economy, which has been battling a downturn exacerbated by the COVID-19 pandemic.
According to customs data released on Thursday, exports in August fell by 8.8% compared to the same period last year. This beat the forecast of a 9.2% decline predicted in a Reuters poll, and was an improvement from the 14.5% drop recorded in July. Similarly, imports contracted by 7.3%, which was also slower than the expected decline of 9.0% and the previous month’s 12.4% fall.
While these figures suggest some positive momentum, experts caution that China’s economy is still at risk of missing its annual growth target of about 5%. Officials are currently grappling with challenges such as a property slump, weak consumer spending, and declining credit growth. As a result, analysts have downgraded their forecasts for the year.
“The trade data is marginally better, but I don’t think we should be reading too much into that: trade is still contracting,” said Frederic Neumann, chief Asia economist at HSBC. He added that while there are signs of stabilization, there is still a long way to go.
To address the economic slowdown, Beijing has implemented various measures in recent months to stimulate growth. These include easing borrowing rules and providing financial support for homebuyers. However, analysts warn that these steps may have limited impact due to a slowing labor market recovery and uncertain household income expectations.
The global economy is closely watching China’s economic performance, as many exporting nations heavily rely on the Chinese market for growth. The drop in South Korean shipments to China, a leading indicator of Chinese imports, slowed to just 0.2% in August, compared to a 27.5% decrease the previous month, suggesting stabilization in China’s trade conditions. Declines in trade with the United States, Southeast Asia, and Australia also narrowed.
However, trade with Japan experienced a significant decline, with outbound shipments from China to Japan down 20% in August compared to the same period last year. Imports from Japan worsened by 17%. Policymakers in Tokyo are concerned that China’s worsening economic situation could negatively impact Japan’s fragile recovery, especially if China fails to implement substantial stimulus measures.
Despite the challenges, there were some positive trends in specific sectors. Crude oil shipments to China in August were 31% higher than the same period last year, while soybean imports also jumped 31% due to attractive prices in Brazil.
While some analysts see signs of stabilization, investors remain cautious. The yuan is hovering near a 10-month low, and the Australian dollar, often seen as a proxy for Chinese growth, weakened after the release of the trade data.
China posted a trade surplus of $68.36 billion in August, lower than the forecasted $73.80 billion and the previous month’s $80.6 billion.
“Due to the low base at the end of last year, it’s very likely for exports to return to growth at the end of this year,” said Nie Wen, an economist at Hwabao Trust, highlighting some optimism for future trade prospects.
Overall, China’s economy continues to face challenges in its path towards recovery, but the slower rate of decline in exports and imports in August provides a glimmer of hope. The effectiveness of ongoing stimulus measures and the revival of domestic demand will be crucial factors in determining the country’s economic trajectory in the coming months.