China facing ‘soft’ trade outlook as export machine splutters amid fading external demand
- China’s exports grew by 7.1 per cent in August compared with a year earlier, but were down from 18 per cent growth in July, while imports grew by 0.3 per cent last month
- The weak data also further dragged down the yuan’s exchange rate against the US dollar, now seen as no longer good news for China’s export-oriented economy
Worse-than-expected trade data in August amid fading external demand suggests “volumes will soften over the coming months”, while offering a fresh glimpse into China’s depressed domestic economic recovery, analysts said.
Imports, meanwhile, grew by 0.3 per cent in August from a year earlier to US$235.53 billion, down from 2.3 per cent growth in July, and also missing expectations.
“Export growth slowed due to weakening external demand. China needs to rely more on domestic demand than exports, as the global economy is likely to slow down,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.
The depreciation of the [yuan] against the US dollar will not benefit exports, or the positive impact on exports can be ignored
The weak data also further dragged down the yuan’s exchange rate against the US dollar, with the currency eventually closing at 6.9715. This was weaker than Tuesday’s close of 6.9485, having earlier in the day briefly traded at 6.99 per US dollar, further testing the key psychological threshold of 7.