BEIJING, Sept 7 (Portal) – China’s exports and imports fell further in August as the twin pressures of falling external demand and weak domestic consumer spending squeezed businesses in the world’s second-largest economy, although declines were slower than expected expected.
While the trade numbers follow a range of other indicators that point to a possible stabilization of China’s slowdown, they fall far short of the growth economists had expected earlier this year as the government abandoned its strict COVID curbs.
Customs data showed on Thursday that exports fell 8.8% in August from a year earlier, beating a Portal poll forecast of a 9.2% decline and a 14.5% decline in July. Meanwhile, imports contracted 7.3%, slower than the expected 9.0% decline and last month’s 12.4% decline.
China’s economy is at risk of missing Beijing’s annual growth target of about 5% as officials grapple with a worsening housing decline, weak consumer spending and slowing credit growth, prompting analysts to downgrade forecasts for the year.
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“Trade data is marginally better, but I don’t think we should get too caught up in it: trade is still contracting,” said Frederic Neumann, chief Asia economist at HSBC.
“There are some signs of stabilization here, but I think there is still a long way to go,” he added.
Beijing has announced a series of measures in recent months to boost growth, including the central bank and top financial regulator easing some lending rules last week to help homebuyers.
But analysts warn the moves may have little impact as the labor market recovery slows and household income expectations remain uncertain.
Containers are seen at Yangshan Deepwater Port in Shanghai, China, October 19, 2020. Portal/Aly Song/File Photo Acquire License Rights
“The numbers suggest that headwinds remain despite some minor improvements,” said Zhou Hao, chief economist at Guotai Junan International. “Looking forward, whether China’s trade growth has already bottomed out will depend on several factors, the most important of which is of course domestic demand.”
Governments around the world are concerned about China’s economic slowdown as many exporting nations rely heavily on the growth of the country’s market.
South Korean shipments to China, a leading indicator of China’s imports, fell by just a fifth last month, slowing from a 27.5% decline the previous month. This is further evidence of stabilizing conditions in China.
The declines in trade with the USA, Southeast Asia and Australia also narrowed.
However, trade with Japan fell sharply, with outbound shipments from China to the neighboring country falling 20% year-on-year in August, while imports deteriorated 17%.
Policymakers in Tokyo fear that China’s worsening economic woes could hurt Japan’s fragile recovery, especially if Beijing fails to support demand with meaningful stimulus.
Crude oil shipments to China in August were 31% higher than the same period last year and 21% higher than July, while soybean imports also rose 31% in August from a year ago, driven by favorable prices in Brazil.
While some analysts saw signs of stabilization in the data, investors were not as impressed with the yuan hovering near a 10-month low and the Australian dollar, seen as an indicator of Chinese growth, weakening after the data was released became.
China posted a trade surplus of $68.36 billion in August, compared with a forecast of $73.80 billion and a July figure of $80.6 billion.
“Due to the low base at the end of last year, it is very likely that exports will grow again at the end of this year,” said Nie Wen, an economist at Hwabao Trust.
Reporting by Joe Cash, Ellen Zhang, Liangping Gao and Beijing Newsroom; Editing by Sam Holmes
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