China’s exports and imports fell in August, data showed on Thursday, as the twin pressures of sagging overseas demand and weak consumer spending squeezed businesses in the world’s second-largest economy.
While the trade numbers beat analysts’ expectations, they show China’s manufacturing sector remains under significant pressure and that policymakers will need to focus on boosting domestic demand to shore up growth, after export orders and imported parts held back factory activity last month.
Exports dropped 8.8% in August year-on-year, customs data showed on Thursday, beating a forecast of 9.2% in a Reuters poll and off a 14.5% drop in July. Meanwhile, imports contracted 7.3%, slower than an expected 9.0% decline and last month’s 12.4% fall.
The economy is at risk of missing Beijing’s annual growth target of about 5% as officials wrestle with a worsening property slump, weak consumer spending and tumbling credit growth, leading analysts to downgrade forecasts for the year.
“The figures suggest the headwinds remain, despite some marginal improvement,” said Zhou Hao, chief economist at Guotai Junan International. “Looking ahead, whether China’s trade growth has already hit the bottom will hinge on several factors, the most important of which is obviously domestic demand.”
Beijing has announced a series of measures in recent months to shore up growth, with the easing of some borrowing rules last week by the central bank and the top financial regulator to aid homebuyers.
But analysts warn the steps may have little impact with a labour market recovery slowing and household income expectations uncertain.
Crude oil shipments were 31% higher in August than the same period last year, and up 21% on July, while soybean imports in August also jumped 31% from a year ago, encouraged by cheap prices in Brazil.
China posted a trade surplus of $68.36 billion in August, compared with a forecast $73.80 billion and a July figure of $80.6 billion.
“Due to the low base at the end of last year, it’s very likely for exports to return to growth at the end of this year,” said Nie Wen, an economist at Hwabao Trust.
