China’s Exports Kept Expanding in August, While Imports Fell

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China’s exports continued to expand in August, as the country’s major trading partners gradually resumed business activities. Imports unexpectedly dropped.

Exports rose 9.5% in dollar terms in August from a year earlier to $235.3 billion, the third-highest month on record. Imports fell 2.1%, the customs administration said Monday, leaving a trade surplus of $58.9 billion for the month. Economists had forecast exports would increase by 7.5% and imports would rise 0.2%.

Key Insights

  • “China’s surprising resilience in exports amid the global pandemic is due to some special factors, including a surge in exports of personal protective equipment and work-from-home products, and a decline of exports from some emerging market competitors which are still severely hit by the pandemic,” said Lu Ting, chief China economist at Nomura International HK Ltd.
  • Growth could continue for another one or two months before seeing a noticeable decline, Lu said, adding that industrial production growth in August might rise further, supporting the PBOC’s stance of keeping policy on hold.
  • Textile exports including masks rose 33.4% in the first eight months in dollar terms from a year ago.
  • The gradual reopening of many economies in Asia and around the world may provide a further boost for exports of Chinese goods.

What Bloomberg Economics Says…

“The headline reading on China’s exports for August likely overstates the recovery in external demand.” The acceleration reflects a distortion from base effects more than the reality on the ground. In month-on-month terms, exports fell — the first drop in monthly readings back to March. “The upshot — the recovery in external demand may not be as smooth as the market has expected.”

— David Qu, Bloomberg Economics

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  • The tradesurplus with the U.S. was $34.2 billion, the highest since November 2018.
  • Bilateral trade is the one area of U.S.-China relations that hasn’t worsened recently, with both nations reaffirming their commitment to aphase-one trade deal. Officials have agreed to create conditions to push the deal forward, according to China’s Ministry of Commerce.
  • “Exports to the U.S. continued to improve, partly a result of the front-loading due to concerns about escalating tensions,” said Tommy Xie, an economist at Oversea Chinese Banking Corp.
  • China’s imports from the U.S.rose 1.8% in August while imports from Australia plummeted 26.2% as relations soured.

— With assistance by Sharon Chen, Lin Zhu, Tomoko Sato, Miao Han, and Yinan Zhao

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