BEIJING: China’s exports unexpectedly fell in August as shipments to the US 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.
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 signalled that more policy loosening may be imminent.
August exports fell one per cent from a year earlier, the biggest fall since June, when it fell 1.3pc, customs data showed on
Sunday. Analysts had expected a 2pc rise in poll after July’s 3.3pc 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.
China let its currency slide past the key seven per dollar level in August for the first time since the global financial crisis, and Washington labelled it a currency manipulator.
Among its major trade partners, China’s August exports to the US fell 16pc year-on-year, slowing sharply from a decline of 6.5pc in July. Imports from America slumped 22.4pc.
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 October 1 and December 15.
Exports to Europe, South Korea, Australia, and Southeast Asia also worsened on an annual basis, compared with
July, while shipments to Japan and Taiwan posted slightly better growth than the previous month.
Yesterday’s data also showed China’s imports shrank for the fourth consecutive month since April. Imports dropped 5.6pc on-year in August, slightly less than an expected 6pc fall and unchanged from July’s 5.6pc 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 $34.84 billion last month, compared with a $45.06bn surplus in July. Analysts had forecast a surplus of $43bn for August.
August saw dramatic escalations in the bitter year-long trade row, with Washington announcing 15pc tariffs on a wide range of Chinese goods from September 1. Beijing hit back with retaliatory levies, and let its yuan currency fall sharply to offset some of the tariff pressure.
China and the US on Thursday agreed to hold high-level talks in early October in Washington, the first in-person discussions since a failed US-China trade meeting at the end of July.
But there was no indication that any planned tariffs on Chinese goods would be halted, and markets expect a lasting peace between the two countries seems more elusive than ever.