China’s exporters were cushioned by a weaker yuan last month, while imports rose for the first time since 2014 as property and infrastructure continued to help prop up growth and stronger demand signaled that the expansion may continue to stabilize.
Key Points
- Overseas shipments slipped 2.8 percent in U.S. dollars in August from a year earlier, but increased 5.9 percent in yuan terms—the sixth straight rise as a weaker currency boosts receipts.
- Imports rose 1.5 percent in dollar terms—the first increase since late 2014—and climbed 10.8 percent in yuan terms.
- The trade surplus was $52.05 billion, narrower than economists forecasts for $58.85 billion in a Bloomberg survey.
Big Picture
Even as it confronts rising wages, a shrinking workforce and intensifying competition from lower-cost nations, China is still eating up a larger chunk of a shrinking international trade market, while a weaker yuan is helping boost receipts. But with global demand remaining tepid, there’s still few signs of a trade-led acceleration, leaving policy makers on guard and the economy increasingly reliant on services and consumption.
Economist Takeaways
“Strong property sales and a major push by Beijing to keep expanding infrastructure construction have increased demand for industrial goods and upstream commodities,” said Victor Shih, a professor at the University of California at San Diego who studies China’s politics and finance. “China’s economy is increasingly a wagon pulled by the two horses of property and infrastructure.”
“It may look better at the surface, but China’s trade engine is still sputtering,” said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. “Exports in dollar terms continued to contract in August, highlighting the broader global trade malaise. Even the new iPhone, a big boost to Asian electronics shipments in the past, has done little to lift Chinese exports.”
“It’s not getting much worse,” Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong, said of trade in a Bloomberg Television interview. “The structural issues from global trade weakness will continue to face China and other countries.”
“Improvement in exports and imports points to stronger external and domestic demand” and add to expectations that growth may further stabilize, Fielding Chen, an economist at Bloomberg Intelligence in Hong Kong, wrote in a report.
“Exchange rate changes have an impact with a lag and thus it isn’t a surprise that a weaker renminbi is starting to translate into somewhat better exports,” said Brad Setser, a senior fellow at the Council on Foreign Relations in New York and a former U.S. Treasury official.
The Details
- Exports were little changed to the U.S., Japan and the European Union while those to Russia climbed.
- Imports from the U.S. slipped, while they increased 13.2 percent from Japan and 12.7 percent from the European Union.
- Crude oil imports rose to 32.85 million tons, or about 7.77 million barrels a day, the fastest pace since April.
- Coal imports jumped to 26.6 million tons, the most since December 2014.
