China’s export growth dips as ‘stronger yuan takes hold’
Country’s trade surplus narrows in August to lowest level since May
China’s growth in exports eased in August as the yuan strengthened, while imports beat expectations, pointing to a stronger appetite for commodities.
Exports rose 5.5 per cent last month year on year, largely in line with market expectations, but the rate was down from July’s 7.2 per cent growth, according to data released by the General Administration of Customs on Friday.
Imports surged 13.3 per cent last month, narrowing the trade surplus to US$42 billion from July’s US$47 billion.
Industrial Bank said the softening in export growth despite better economic conditions in developed countries suggested the yuan’s appreciation was starting to have an impact.
The lender also said the rise in the volume and prices of imports could signal firms were bringing production forward to offset environmental curbs in winter.
It said a stronger Chinese currency and rising trade protectionism could put further pressure on exports, with a brake on imports also expected in coming months.
Shipments to the United States rose 8.4 per cent last month, slightly down from the 8.5 per cent increase in July, according the customs data.
Nevertheless, China’s trade surplus with the US reached US$26.2 billion last month, the highest for the year and potentially adding to bilateral tensions.
US President Donald Trump has accused China of abusing the trade surplus to steal jobs from the US. Last month, Trump gave the go-ahead for an investigation into trade with China, a move that could result in punitive tariffs on China’s exports to the US.
Louis Kuijs, head of Asia economics at Oxford Economics, said: “Downside risks to exports remain, in particular in the area of US-China trade relations.”
Kuijs said the easing in overall export growth in August pointed to a softening of global demand momentum, with shipments to emerging Asia and the US more than offset by slower growth in exports to the European Union and Japan.
“Meanwhile, goods imports growth rose, suggesting that China’s domestic demand may be more resilient than expected,” he said.
China International Capital Corporation said the yuan appreciated 5.5 per cent against the US dollar in early September from the end of May, which might help rebalance China-US trade.
CICC said external demand was on the rise but the threat of a trade confrontation between Beijing and Washington, and the rising geopolitical tension from North Korea’s nuclear weapons test might add to uncertainties for global trade.
China Merchants Securities said Hurricane Harvey, which has battered parts of the United States, could affect external demand over the short run.