Chinese Exports Rose in August Despite Growing Trade Barriers
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.