2024-09-11 05:58:04
Second largest economy
German exports to China collapse
Updated on 10.09.2024 – 12:47Reading time: 3 min.
Is China’s economy slowly recovering? The People’s Republic’s trade figures at least suggest this development. Only trade with Germany is sluggish.
A glimmer of hope for China’s economic recovery: exports from the second-largest economy grew more than expected in August. In contrast, imports from Germany collapsed.
According to data from the Beijing Customs Authority, exports rose by 8.7 percent year-on-year to the equivalent of 309 billion US dollars (about 280 billion euros). This means that Chinese exports have increased for the fifth month in a row.
Imports increased by 0.5 percent. Analysts had previously expected exports to increase by 6.6 percent, while imports were expected to increase by 2.5 percent.
“China’s trade figures clearly reflect the division of the economy,” commented analyst Sandro Pannagl of Landesbank Baden-Württemberg. The data make it clear that foreign demand remains the engine of the current growth dynamic, while domestic demand is waiting for impulses.
Customs officials said exports increased to almost all markets, with significant increases in shipments to the European Union, India and Brazil. Exports to the United States rose by about five percent to their highest level since September 2022, while shipments to Russia also increased.
Germany feels the impact of weak consumption in China
According to Chinese customs, there were particularly large deviations in trade with Germany in August. While China’s exports rose by 21.3 percent, Chinese imports from Germany fell by 17 percent. Since the beginning of the year, China’s exports to Germany have increased by 3 percent year-on-year, while imports have fallen by 12.4 percent.
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“Weak domestic consumption in China and cautious investments in the private sector are putting pressure on demand for German goods, which is something that companies in Germany are feeling,” commented Maximilian Butek, managing board member of the German Chamber of Commerce in East China.
The trade figures for August show that Chinese companies are selling more goods abroad. However, according to data published by the Beijing Statistics Authority on Monday, they are having to accept ever lower prices overall. Producer prices fell again in August by 1.8 percent compared to the previous year.
Producer prices have been falling continuously for almost two years. While concerns about deflation are growing in China, other countries are alarmed by the flood of cheap exports. The EU and the USA have recently imposed high tariffs on electric cars made in China.
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Beijing has been planning to restructure the economy for some time. In the hope of creating new growth drivers, the expansion of high-tech sectors such as renewable energies and electromobility is being promoted. However, the new industries are struggling with overcapacity.
Many companies have emerged in the electric car industry, which are now facing tough competition in the domestic market. Profits are also difficult to make because consumption is weakening due to economic uncertainty.
The crisis is particularly severe in the real estate sector, which has long contributed strongly to Chinese growth but is now experiencing a massive slump.
Millions of unsold homes are empty and many companies in this bloated sector are insolvent. At the same time, the labor market is tight, with young people in particular having difficulty finding employment that matches their qualifications.