China’s exports and imports both experienced declines in August compared to the previous year, indicating weak global demand that is further pressuring the country’s slowing economy. In the fourth consecutive month of decline, exports slumped by 8.8% to $284.87 billion, while imports fell by 7.3% to $216.51 billion. As a result, the total trade surplus decreased to $68.36 billion from $80.6 billion in July.
China’s leaders have implemented various policy measures in an attempt to support the economy after the country’s rebound from the COVID-19 pandemic faltered earlier than expected. The central bank has eased borrowing rules, reduced mortgage rates for first-time homebuyers, and introduced tax relief measures for small businesses. However, large-scale stimulus spending and broader tax cuts have been avoided so far.
The demand for Chinese exports weakened following interest rate hikes by the Federal Reserve and central banks in Europe and Asia, aimed at curbing inflation that had reached multi-decade highs. Economists believe that the full impact of these rate increases has yet to be felt in major Western economies, where consumer spending has remained relatively strong. Looking ahead, it is expected that exports will continue to decline in the coming months before potentially stabilizing towards the end of the year.
While China’s trade has been gradually declining over the past two years, August’s decline in exports and imports was less severe compared to July. In July, exports fell by 14.5% and imports by 12.4% year-on-year. Politically sensitive exports to the U.S. decreased by 17.4% to $45 billion, while imports of U.S. goods fell by 4.9% to nearly $12 billion. On the other hand, China’s imports from Russia, primarily oil and gas, increased by 13.3% to $11.52 billion. This increase in energy purchases from Russia has helped offset revenue lost due to Western sanctions imposed as a response to the Kremlin’s invasion of Ukraine. Lastly, exports to the European Union dropped by 10.5% to $41.3 billion, while imports of European goods declined by 2.5% to $24.56 billion.
China’s economy remains under pressure as weak global demand causes a decline in August exports and imports
