China’s economy gets a welcome boost from strong August exports

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Containers are seen at Yangshan Deep Water Port in Shanghai, China. Photo: REUTERS/FILE

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Containers are seen at Yangshan Deep Water Port in Shanghai, China. Photo: REUTERS/FILE

Chinese exports unexpectedly grew at a faster pace in August on strong global demand, helping to relieve some of the pressure on the world’s second-largest economy as it navigates its way through headwinds on several fronts.

The Asian giant had staged an impressive recovery after a coronavirus crisis.

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But economic momentum has recently weakened due to Covid-19 outbreaks caused by the Delta variant, high commodity prices, slow factory activity, tighter measures to rein in oil prices. hot real estate and a campaign to reduce carbon emissions.

Shipments from the world’s largest exporter in August rose 25.6% year-on-year, accelerating from 19.3. % gain in July, according to customs data released today, indicating some resilience in China’s industrial sector.

Analysts polled by Reuters had forecast growth of 17.1%.

“Although short-term headwinds remain, supply constraints in China have eased and we believe the global economic recovery will continue to support Chinese exports later this year and into 2022,” said Louis Kuijs, chief executive. of Asian Economics at Oxford Economics.

Exports from neighboring countries also showed encouraging growth last month, with South Korean shipments accelerating on strong foreign demand.

The distribution of shipments showed a slight increase in all types of goods, said Sheana Yue, deputy economist at Capital Economics.

“In particular, the rebound in Chinese-made consumer goods such as electronics, furniture and leisure products may reflect the fact that retailers in advanced economies have been restocking ahead of the Christmas shopping season.” , Yue said.

Meanwhile, some of the port stalemate appears to have dissipated, boosting Chinese shippers last month. Eastern coastal ports have suffered traffic jams as a terminal at the country’s second-largest container port closed for two weeks due to a Covid-19 case. This has put additional pressure on global supply chains already struggling with a shortage of container ships and high commodity prices.

Stretched global shipping capacity has left many boxes of finished goods piled up in Chinese factories, a factor that is expected to increase the number of Chinese exports in the coming months, said Meng Xianglong, founder of Heji Trade & Credit Research. Center based in the port city of Ningbo.

“I think China’s robust export growth is expected to last until the end of this year (around Christmas) or even early next year,” he said. Meng said, adding that some factories are fully booked until the first quarter of 2022.

However, behind the big solid numbers, companies are struggling on the ground.

Businesses faced mounting pressure in August as factory activity expanded at a slower pace while the service sector slumped in contraction. A global shortage of semiconductors has heightened strains on exporters.

The country appears to have largely contained the latest coronavirus outbreaks of the more infectious Delta variant, but it prompted measures including mass testing for millions of people as well as varying degrees of travel restrictions in August.

Many analysts expect the central bank to further reduce the amount of cash banks must hold as reserves later this year to spur growth, on top of the July cut that freed up about $1 trillion. yuan ($6.47 trillion) of long-term liquidity in the economy.

Imports rose 33.1% year-on-year in August, beating a 26.8% gain expected in the Reuters poll, led by still-high commodity prices and partly reflecting the statistical effect of weak data from ‘one year ago.

Commodity prices remain high despite Beijing’s attempts to calm them down. In July, imports increased by 28.1%.

China’s coal imports in August were up 35.8% from a year ago due to tight domestic supply and strong demand, while iron ore imports also increased for the first time in five months.

China posted a trade surplus of $58.34 billion in August, while the survey forecast a surplus of $51.05 billion and $56.58 billion in July.

The trade surplus with the United States – a source of friction for years between the two economic powers – rose to $37.68 billion from $35.4 billion in July, according to Reuters calculations based on customs data.

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