China’s exports unexpectedly fell in August as shipments to the United States slowed sharply, pointing to further weakness in the world’s second-largest economy and underlining a pressing need for more stimulus as the Sino-US trade war escalates.
August exports fell 1 percent from a year earlier, the biggest fall since June, when it fell 1.3 percent, Reuters reports, citing customs data released on Sunday. Analysts had expected a 2.0 percent rise in a Reuters poll after July’s 3.3 percent gain.
That’s despite analyst expectations that a falling yuan would offset some cost pressure and looming tariffs may have prompted some Chinese exporters to bring forward or “front-load” US-bound shipments into August, a trend seen earlier in the trade dispute.
Among its major trade partners, China’s August exports to the US fell 16 percent year-on-year, slowing sharply from a decline of 6.5 percent in July. Imports from America slumped 22.4 percent.
Many analysts expect export growth to slow further in coming months, as evidenced by worsening export orders in both official and private factory surveys. More US tariff measures will take effect on Oct. 1 and Dec. 15.
“China-US trade friction has led to a sharp decline in China’s exports to the United States,” said Steven Zhang, chief economist and head of research at Morgan Stanley Huaxin Securities.
Exports to Europe, South Korea, Australia, and Southeast Asia (ASEAN) also worsened on an annual basis, compared with July, while shipments to Japan and Taiwan posted slightly better growth than the previous month.
Sunday’s data also showed China’s imports shrank for the fourth consecutive month since April. Imports dropped 5.6 percent on-year in August, slightly less than an expected 6.0 percent fall and unchanged from July’s 5.6 percent decline.
Sluggish domestic demand was likely the main factor in the decline, along with softening global commodity prices. China’s domestic consumption and investment have remained weak despite more than a year of growth-boosting measures.
China reported a trade surplus of US$34.84 billion last month, compared with a US$45.06 billion surplus in July. Analysts had forecast a surplus of US$43 billion for August.
China’s trade surplus with the US stood at US$26.95 billion in August, narrowing from July’s US$27.97 billion.
It still reached US$195.45 billion in the first eight months of 2019, highlighting continued imbalances which have been a core complaint of Trump’s in his administration’s negotiations with Beijing.
“The global economy is approaching the turning point of a recession, and external demand will for sure become worse and worse,” Morgan Stanley Huaxin Securities’ Zhang said.
Beijing is widely expected to announce more support measures in coming weeks to avert the risk of a sharper economic slowdown as the US ratchets up trade pressure, including the first cuts in some key lending rates in four years.
On Friday, the central bank cut banks’ reserve requirements for a seventh time since early 2018 to free up more funds for lending, days after a cabinet meeting signaled that more policy loosening may be imminent.
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