China’s exports grew by 8.7% year-on-year in August, outperforming forecasts and offering a rare boost to an economy grappling with domestic challenges.
The growth, measured in US dollar terms, was higher than the 6.5% increase predicted in a Reuters poll. This export surge follows a 7% rise in July, according to data released by China’s customs agency.
Despite the strong export performance, China’s imports rose by just 0.5% in August, falling short of the anticipated 2% growth. This marks a significant slowdown from July’s 7.2% increase in imports. The trade data reflects a broader trend of robust export activity contrasted with weaker domestic demand, raising questions about China’s economic resilience.
China’s exports to its key trading partners, including the US, the European Union (EU), and the Association of Southeast Asian Nations (ASEAN), all saw year-on-year growth in August. Exports to the EU led the way, climbing 13%, while exports to the US and ASEAN also registered notable increases. On the import side, China’s purchases from the US rose by 12%, while imports from the EU declined. Imports from ASEAN grew by 5%.
Certain export categories showed particularly strong performance. China’s car exports surged nearly 40% in August, with 610,000 vehicles shipped abroad. Exports of ship vessels and smartphones also increased, by 40% and 6.7%, respectively.
In contrast, the rare earths sector saw declines, with rare earth exports down 1% and imports falling 12%. China has been tightening its oversight of the rare earths industry, citing national security concerns, which could have contributed to the drop in trade volumes.
While the export data is encouraging, analysts caution that imports are a more crucial indicator of China’s economic health, especially given concerns about insufficient domestic demand.
“Imports are critical to assessing whether China can avoid a deflationary cycle.” said Steve Brice, chief investment officer at Standard Chartered Wealth Management.
China’s growing reliance on exports also comes amid rising trade tensions with the US and the EU, both of which have increased tariffs on Chinese products, including electric vehicles. Despite these challenges, China’s exports in August reached their highest value in nearly two years, amounting to $309 billion, resulting in a trade surplus of $91 billion.
Looking ahead, China is set to release more economic data, including retail sales and industrial production figures for August, as well as the Consumer Price Index (CPI), which showed only modest growth of 0.3% year-on-year in August.
CNBC, Reuters, and Yahoo Finance contributed to this report.
