China’s exports tumble as pressure grows for economic support from Beijing

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China’s exports fell 8.8 per cent in August compared with a year earlier, marking the fourth consecutive month of decline as the manufacturing sector in the world’s second-largest economy struggles to regain momentum.

The August contraction was less severe than a forecast fall of 9.2 per cent, according to analysts polled by Reuters, and better than the decline in July, when China’s exports shed 14.5 per cent, the worst since the start of the pandemic.

Chinese trade buoyed economic activity during the country’s coronavirus pandemic lockdowns. But exporters have struggled this year with high global inflation and as foreign consumers cut back on electronics purchases.

The sustained weakness in trade and manufacturing comes as Chinese policymakers are also facing turmoil in the property sector, one of the economy’s other main growth engines, raising concerns for a post-pandemic recovery that has failed to take off.

Policymakers in Beijing have come under pressure to provide more support but have refrained from enacting sweeping stimulus measures to revive growth, which lagged in the second quarter. The economy expanded just 0.8 per cent on the previous three months. Sluggish consumer sentiment led to price deflation in July, while factory activity slowed for a fifth straight month in August.

Beijing last week released its strongest measures in years to prop up housing demand, but analysts argued more would be needed to reach the government’s official growth target for this year of 5 per cent, which is already the lowest in decades.

China’s customs authority said imports dropped 7.3 per cent in August, compared with a Reuters forecast of a 9 per cent decline and a 12.4 per cent fall in July. The August trade surplus was $68.36bn, down 13.2 per cent year on year.

Car exports soared 104.4 per cent during the January-August period, reflecting China’s huge output of electric vehicles.

The customs authority said the Association of Southeast Asian Nations — a bloc that includes Indonesia, Thailand, Singapore, Malaysia and Vietnam — was China’s biggest trading partner in renminbi terms during the first eight months of the year. Total trade with the EU, US and Japan, its next largest trading partners, fell.

The decline in trade with the US follows years of rising tensions between the two countries.

The Biden administration has recently sought to re-establish high-level dialogue, with US commerce secretary Gina Raimondo visiting China last month and setting up bodies to discuss commercial issues and export controls. But she also warned during the visit that American companies increasingly saw China as “uninvestable”.

Economists said the better than expected trade data showed the process of manufacturers “destocking” excess inventories built up during the pandemic was gradually ending.

“It’s not just China, but if you look at the other Asian countries, their August trade numbers are also better,” said Robin Xing, chief China economist at Morgan Stanley.

Analysts at Oxford Economics said there were signs the sharp downturn in semiconductors, a critical component of trade in Asia, was bottoming out. Global car exports also regained pre-pandemic levels.

But they cautioned that other indicators showed “a shallow trade recession” for the world this year, with a modest recovery in 2023.

“Further spillovers to world trade from depressed trade in China could be substantial, slowing industrial expansion in the region and hitting commodity prices,” they wrote.

China’s crude oil shipments by volume were up 14.7 per cent year on year in the first eight months of the year, while soyabean import volumes jumped 17.9 per cent during the same period, China’s customs authority said.

Financial Times

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