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Outbound shipments rose 8.7% from a year earlier in August

China’s exports in August beat expectations and accelerated despite growing trade barriers, giving Beijing a little breathing room in its efforts to lift domestic demand and reawaken the anemic economy.

Outbound shipment in August rose 8.7% compared with the same period a year earlier, picking up from July’s 7.0% increase, the General Administration of Customs said Tuesday. That beat the 6.6% growth tipped by a Wall Street Journal poll of economists.

The rise in shipments sent the value of exports to their fastest on-year increase in 17 months, as export volumes reached a record high, according to Zichun Huang, an economist at Capital Economics. “Outbound shipments are likely to remain strong in the coming months,” added Huang, in a note to clients.

The export growth comes against the backdrop of rising trade barriers targeting Chinese products. In July, the European Union imposed higher tariffs on Chinese electric vehicles. The U.S. and Canada have also announced plans to impose hefty tariffs on goods from China, including EVs.

But this could be offset by rerouting trade as well as the weaker Chinese yuan, said Huang, adding that tariffs only target a small portion of China’s outbound shipments.

The growth of China’s exports to the U.S., its second-largest trade partner, accelerated to 13.4% on year in August, up from July’s 8.0%. Shipments in August to the Association of Southeast Asian Nations and EU, its No. 1 and No. 3 trade partners, slowed but still grew at 9.0% and 5.0% respectively, according to calculations made by The Wall Street Journal based on official data.

The resilience of China’s exports has delayed the need for Chinese leaders to introduce more proactive measures to address weakening domestic demand, economists say.

“The question is how long exports can stay strong given the weakening U.S. economy and the rising trade tension,” said Zhiwei Zhang, chief economist at PinPoint Asset Management.

Concerns over weak demand and potential deflation have been growing as Beijing remains hesitant to implement aggressive stimulus measures given heavy debts already incurred by local governments. Inflation data released on Monday fell short of market expectations, even though food prices were driven higher by extreme summer weather.

The lackluster domestic demand was also indicated in Tuesday’s import data. August import growth cooled to 0.5% in August, after surging 7.2% in July, official data showed. Economists had projected August imports would rise 2.5%. That widened the August trade surplus to $91.02 billion, compared with $84.65 billion in July and the $80.0 billion tipped by a WSJ poll of economists.

Economists surveyed by Journal expect major economic indicators due Saturday, including factory production, investment and consumer spending, will provide more indications that the economy continued to slow in August.

Alibaba Shares Rise on Hopes for Higher Demand From Mainland Investors

Investors in mainland China will be able to directly trade in Alibaba’s Hong Kong-listed stock via the Stock Connect program

Alibaba Group’s 9988 5.11%increase; green up pointing triangle shares surged in Hong Kong on expectations that easier access for mainland Chinese investors may boost demand for the e-commerce giant’s stock.

Shares rose 4.7% to 81.95 Hong Kong dollars, equivalent to US$10.51, early Tuesday. The stock was the top gainer on the benchmark Hang Seng Index and outperformed the index, which was recently up 0.2%.

The gains came after Alibaba Group’s Hong Kong shares were included by the Shanghai and Shenzhen stock exchanges in the Stock Connect scheme. The program links the Shanghai and Shenzhen stock exchanges with Hong Kong’s bourse, allowing mainland investors to trade eligible Hong Kong shares.

The southbound Stock Connect inclusion will attract new buying interest for the stocks from mainland-based investors, Daiwa analysts said.

Goldman Sachs analysts said in a recent note that the inclusion of Alibaba in the program could attract around US$2 billion to US$3 billion of mainland liquidity by the end of this year.

Over a two- to three-year period, total inflows could reach US$11 billion, following the liquidity trajectory of peers Tencent, Meituan and Xiaomi, the Goldman Sachs analysts said.

Alibaba is the largest company in terms of market capitalization among the 13 companies that have secondary listings in Hong Kong. As of Sept. 9, southbound shareholding accounted for 10% of Tencent’s total Hong Kong shares, 14.5% for Xiaomi and 12.8% for Meituan, according to data provider Wind.

Although Chinese equities have faced challenging market liquidity amid stricter market regulations and weak faith in the country’s economy, southbound net buying has been “exceptionally strong,” Goldman Sachs analysts said.

Alibaba’s Hong Kong shares have risen 8.0% so far this year.

Pull towards Russia and China grows stronger, says boss of Kazatomprom

Kazatomprom’s chief executive has warned that Russia’s war on Ukraine is making it harder for the world’s largest uranium producer to keep supplying the west as the gravitational pull towards Moscow and Beijing grows stronger.

Meirzhan Yussupov, chief of the Kazakh state miner, said that sanctions caused by the war had created obstacles to supplying western utilities.

“It is much easier for us to sell most, if not all, of our production to our Asian partners — I wouldn’t call [out] the specific country . . . They can eat up almost all of our production, or our partners to the north,” he told the FT.

He added however: “It’s much easier to sell to them but we don’t want to put all our eggs in one basket.”

The Astana-based miner, of which the Kazakh state owns 75 per cent, wants to keep a diverse mix of customers that includes US and European utilities, even though shipping material on the traditional, cheaper route via St Petersburg is no longer an option because of sanctions risk.

Kazatomprom, which is listed in Astana and London, has sought to establish an alternative route to ship material through the Caspian Sea, Azerbaijan, Georgia and the Black Sea, at a higher cost.

Kazakhstan produces 43 per cent of the world’s uranium, equivalent to the market share that the Opec cartel has over oil. But the potential influence of Russia over its Central Asian neighbour has been an increasing source of concern for western utilities and industry partners.

“You will see some changes,” said Leigh Curyer, chief executive of NexGen Energy, which is developing a large uranium mining project in Canada. “Perhaps their production will increase to servicing Russia and China. If that’s the case, western world utilities will look to western world suppliers . . . I think we’re already seeing signs of that.”

Rosatom, Russia’s nuclear monopoly, holds a stake in five of Kazatomprom’s 14 deposits. Under those arrangements, it receives 20 per cent of the country’s output, said Yussupov.

Adding to the challenge is that Russia and China are leading the construction of new nuclear plants globally.

In 2022, the company disclosed in a footnote in its annual report that the ownership of the company holding a 49 per cent stake in Budenovskoye, a giant deposit that Kazatomprom is developing, was transferred to entities including Rosatom’s subsidiary Uranium One. The lack of transparency over the disposal caused concerns internally, according to one person with direct knowledge of the matter.

A dozen senior Kazatomprom executives have left over the past two years, according to disclosures. Kazatomprom denied that the exodus was partly related to the stake sale.

“There is not that big a concern” about Rosatom’s level of involvement, citing lower levels of interdependence between the two countries compared with the oil and gas sector, Yussupov said.

But he also added: “There is, of course, concern”.

The chief’s comments came after the company last month downgraded its output forecast for 2025 by 17 per cent and suspended its 2026 guidance. It cited shortages of sulphuric acid, essential to extract uranium, and construction delays for surface facilities and infrastructure.

Kazatomprom sent 49 per cent of uranium under its control to the Asian market, 32 per cent to Europe and 19 per cent to the American market last year, according to its latest annual report.

“We are very serious about diversifying the geography of our sales,” Yussupov said.

Katie Mallinson, partner of Prism Political Risk Management, a business intelligence company, said that Kazakhstan had been under increasing pressure from Russia and China to restrict its interaction with western nations, particularly since US troops left Afghanistan in 2021.

“This is particularly the case for uranium, where it has a pivotal role in the global supply chain,” she said.

“Russia has increased its stake in Kazakhstan’s production of uranium and Kazakhstan has been committing more and more of its supply to the Chinese market. This is leaving serious questions in the long term as to how much uranium will be available on western markets.”