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China’s exports fell 8.8% in August from a year earlier, the fourth straight month of decline, as manufacturing in the world’s second-largest economy struggled to regain growth momentum.
Analysts polled by Reuters said the August contraction was less severe than the expected 9.2% drop and was better than the drop in July, when China’s exports fell 14.5%, the worst since the outbreak began.
Chinese trade has boosted economic activity during the country’s coronavirus pandemic lockdown. But this year, exporters have struggled due to high global inflation and foreign consumers cutting back on electronics purchases.
The continued weakness in trade and manufacturing comes as Chinese policymakers also face turmoil in the housing sector, one of the economy’s other key growth engines, raising concerns that the post-pandemic recovery has failed to take off.
Policymakers in Beijing are under pressure to provide more support but have refrained from sweeping stimulus to revive economic growth that lagged in the second quarter. The economy grew just 0.8% in the first three months. Sluggish consumer confidence led to price deflation in July, while factory activity slowed for a fifth straight month in August.
Beijing last week issued its strongest measures in years to prop up housing demand, but analysts say more will be needed to meet the government’s official growth target of 5 percent this year, already the lowest in decades .
Chinese customs authorities said imports fell 7.3% in August, compared with a Reuters forecast for a 9% fall, after falling 12.4% in July. In August, the trade surplus was US$68.36 billion, a year-on-year decrease of 13.2%.
Auto exports soared 104.4 percent in the January-August period, reflecting China’s huge output of electric vehicles.
The Association of Southeast Asian Nations, which includes Indonesia, Thailand, Singapore, Malaysia and Vietnam, was China’s largest trading partner in yuan terms in the first eight months of this year, customs authorities said. Total trade with its second-largest trading partner, the European Union, the United States and Japan, fell.
The drop in trade with the United States comes after years of rising tensions between the two countries.
The Biden administration has recently sought to re-establish a high-level dialogue, with U.S. Commerce Secretary Gina Raimondo visiting China last month and setting up a body to discuss commercial issues and export controls. But she also warned during her visit that U.S. companies increasingly view China as “uninvestable”.
Economists said the better-than-expected trade data showed that the process of manufacturers “destocking” excess inventories built up during the epidemic is winding down.
“It’s not just China, if you look at other Asian countries, their August trade numbers were also better,” said Robin Xing, chief China economist at Morgan Stanley.
Analysts at Oxford Economics said there were signs that the sharp decline in semiconductors, an important part of Asian trade, was bottoming out. Global auto exports have also returned to pre-pandemic levels.
But they warned that other indicators pointed to a “slight recession” in global trade this year, followed by a modest recovery in 2023.
“Further spillovers from China’s trade downturn to world trade could be substantial, slowing industrial expansion in the region and hitting commodity prices,” they wrote.
In the first eight months of this year, China’s crude oil shipments rose 14.7 percent year-on-year, while soybean imports rose 17.9 percent over the same period, Chinese customs authorities said.