BEIJING, Sept 10 (Askume) – China’s exports grew at the fastest pace in nearly a year and a half in August, a sign that manufacturers raised orders ahead of a growing number of trading partners imposing tariffs, while domestic exports weakened, while imports were disappointing.
The mixed trade data underscored the challenges facing Beijing as policymakers try to boost overall growth without relying too heavily on exports, especially while tightening consumer wallets.
China’s economy failed to grow last year amid a prolonged slowdown in the property sector, and a survey last week showed a drop in exports and factory-gate prices at the lowest in 14 months, suggesting producers are cutting prices to survive.
Customs data on Tuesday showed outbound cargo volumes from the world’s second-largest economy rose 8.7% last month from a year earlier, the fastest pace since March 2023, according to a Askume survey of economists
But imports rose only 0.5%, below the expected 2% rise and down from a 7.2% increase a month earlier.
“Strong export performance and trade surplus are conducive to economic growth in the third quarter and the full year,” said Zhou Maohua, a macroeconomic researcher at China Everbright Bank.
“But the global economic and geopolitical environment is complex, and China’s exports face many challenges.”
Economists warn that if Beijing relies too much on exports, it could hamper its growth goals. The increasingly disappointing data has put pressure on policymakers to provide more stimulus to revive China’s economy.
“Sustained strong export growth could delay near-term policy support, and we expect bolder moves in the fourth quarter,” Nomura analysts said in a note.
In August, exports to the European Union rose 13.4% year-on-year, ranking first among China’s major export markets, followed by an 8.8% rise in exports to Southeast Asian economies.
Last month, China’s exports to the United States increased only 4.9% compared with the same period last year, but imports increased by 12.2% during the same period, ranking first among major import markets.
Trade Barriers
Rising trade barriers are emerging as another major hurdle threatening China’s value-driven export momentum.
China’s trade surplus with the United States grew to $33.81 billion in August from $30.84 billion in July. Washington has repeatedly highlighted the surplus as evidence that one-sided trade benefits the Chinese economy.
Brussels’ trade policy has also become more defensive, and Beijing has made little progress in talks with the EU to reduce tariffs on Chinese electric vehicles.
Last month, Canada announced a 100% tariff on Chinese electric vehicles and a 25% tariff on Chinese steel and aluminum.
As China tries to export more products to Southeast and South Asia, it also faces resistance there.
India plans to raise tariffs on Chinese steel, Indonesia is considering imposing higher tariffs on imported textiles, and Malaysia has launched anti-dumping investigations on plastic imports from China and Indonesia.
Still, some analysts expect exporters to weather the storm, given that China’s yuan is relatively cheap and exporters can re-export goods relatively easily to avoid tariffs.
“Export volumes are likely to remain strong in the coming months. Of course, more barriers are being set up,” said Huang Jichun, China economist at Capital Economics.
“We suspect that the tariffs announced so far will prevent the real effective exchange rate from falling, allowing China to increase its global export market share,” he added.
Import is slow
Lower-than-expected imports do not bode well for exports in the coming months, as nearly a third of China’s purchases, particularly in the electronics industry, are for re-export.
China’s commodity purchases also reflected disappointing domestic conditions, with iron ore imports falling 4.73% last month compared with the same period a year ago, as weak demand from China’s construction industry troubled steelmakers.
Moreover, while China bought a record 12.14 million tonnes of soybeans in August, there are ominous signs for the producing superpower’s future export performance.
Analysts said traders were taking advantage of low prices to stock up on goods, sparking a buying frenzy as they fear trade tensions with the United States could escalate if Donald Trump returns to the White House next year.
Overall, despite positive export growth in August, “there is still uncertainty about whether the momentum can be sustained,” said Lin Song, chief economist at ING China.
“In addition to the upcoming tariffs and weak export order data over the past few months, if global growth begins to slow, this could also lead to a slowdown in exports.”
