China’s exports and imports grow slower than expected in August

The exports and imports of China weakened in August, with growth significantly below forecasts as rising inflation dented demand, while new restrictions due to Covid-19 and heat waves halted production, reviving downside risks to the economy.

At exports increased 7.1% in August from a year earlier, slowing from an 18% rise in July and marking the first slowdown since April, official data showed on Wednesday, well below expectations. analysts’ growth of 12.8%.

“It appears that the weakening of exports has come earlier than expected, as recent shipment data suggest that demand from the US and EU has already slowed as shipping prices have dropped significantly,” said Zhou Hao, an economist- head of Guotai Junan International.

The yuan’s weakening has failed to give China’s exports the competitive edge they need to offset waning demand.

The slower growth is also partly due to comparisons with strong exports last year, but it was also made worse by more restrictions on Covid-19 as infections rose and heat waves stopped production from factories in the southwestern areas.

Contrary to the general trend, auto exports remained robust in August, jumping 47% from a year earlier, according to Reuters calculations based on customs data.

In the first eight months, China exported 1.9 million units of cars, an increase of 44.5%, supported by strong demand for new energy vehicles in the Southeast Asia .

Import concerns

Weak domestic demand, pressured by the worst heat waves in decades, a housing crisis and sluggish consumption, hurt imports.

Purchases from abroad grew by just 0.3% in August, from 2.3% in the previous month, well below the forecast increase of 1.1%. Both imports and exports grew at the slowest pace in four months.

Imports of crude oil, iron ore and soybeans from China have fallen as tight Covid-19 restrictions and extreme heat have disrupted domestic production.

That left a trade surplus of $79.39 billion, compared to a record surplus of $101.26 billion in July and the lowest since May, when Shanghai was emerging from the measures of lockdown .

Chinese policymakers this week signaled a renewed sense of urgency to shore up the slumping economy, saying action was essential in the quarter as data points to further loss of economic momentum.