China’s exports grew at their fastest pace in nearly a year and a half in August, suggesting manufacturers are rushing to place orders ahead of expected tariffs from a growing number of trading partners, while imports disappointed amid weak domestic demand.
The mixed trade data highlights the challenge facing Beijing as policymakers try to boost overall growth without relying too heavily on exports, especially given tightening consumer wallets.
China’s economy has failed to take off over the past year amid a prolonged property slump, and a survey last week showed exports stagnating and factory prices at their lowest levels in 14 months, indicating producers are cutting prices to find buyers.
Outbound shipments from the world’s second-largest economy grew 8.7 percent year-on-year in value last month, the fastest pace since March 2023, customs data showed on Tuesday, beating the 6.5 percent rise forecast in a Reuters poll of economists and a 7 percent increase in July.
But imports rose just 0.5 percent, below expectations for a 2 percent increase and 7.2 percent growth the previous month.
“Strong export performance and trade surplus are conducive to economic growth in the third quarter and the full year,” said Zhou Maohua, a macroeconomic researcher at China Everbright Bank.
“However, the global economic and geopolitical environment is complicated and China’s exports face many obstacles,” he added.
Economists have warned that Beijing risks missing its growth target if it becomes too reliant on exports after a string of lackluster recent data, adding to pressure on policymakers to deploy more stimulus to revive the Chinese economy.
In addition, rising trade barriers are emerging as another major obstacle, threatening China’s price-driven export momentum.
China’s trade surplus with the United States widened from $30.84 billion in July to $33.81 billion in August. Washington has repeatedly highlighted this surplus as evidence that one-sided trade benefits the Chinese economy.
Brussels’ trade policy has also become more protectionist, and Beijing’s efforts to negotiate with the European Union to ease tariffs on Chinese electric vehicles have made little progress.
And last month Canada announced a 100 percent tariff on Chinese electric vehicles, along with a 25 percent tariff on Chinese steel and aluminum.
As China tries to pivot and direct more exports to Southeast Asia and South Asia, it is facing pushback there, too.
India is planning to raise tariffs on Chinese steel, Indonesia is considering imposing heavy tariffs on textile imports, and Malaysia has opened anti-dumping investigations into plastic imports from China and Indonesia.
Still, some analysts expect overseas shipments to weather the storm, given the relative cheapness of the Chinese yuan and the relative ease with which exporters can re-route their products to avoid tariffs.
“Outbound shipments are likely to remain strong in the coming months. It’s true that more barriers are being erected,” said Zichun Huang, China economist at Capital Economics.
“We doubt that the tariffs announced so far will prevent real effective exchange rate declines from driving further gains in China’s global export market share,” he added.
Lower-than-expected imports may not bode well for exports in the coming months, as nearly a third of China’s purchases are parts for re-export, particularly in the electronics sector.
China’s commodity purchases also pointed to a gloomy domestic picture, with iron ore imports from the Asian giant falling 4.73 percent from a year earlier last month as weak demand in the country’s construction sector hit steelmakers.
Also, while China bought a record 12.14 million metric tons of soybeans in August, there were ominous signs for the producing powerhouse’s future export performance. Analysts say the buying spree was motivated by traders taking advantage of lower prices to stock up amid concerns that trade tensions with the U.S. could escalate if the country’s exports continue to rise. Donald Trump He returns to the White House next year.
Overall, while August exports were positive for growth, “it is still uncertain whether this momentum can last,” said Lynn Song, chief economist for China.
“In addition to incoming tariffs and sluggish export order data in recent months, if global growth momentum also starts to slow, this could also dampen export momentum.”
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