China’s Export Growth Hits 6-Month Low in August
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China’s export growth slowed to the weakest in six months as a slump in shipments to the U.S. deepened again, although a surge in sales to other markets kept Beijing on track for a record trade surplus of over $1.2 trillion this year.
Overall sales abroad rose 4.4% in August from a year earlier to $322 billion, according to a statement from the General Administration of Customs on Sept. 8. That fell short of the median estimate in a Bloomberg survey and was far weaker than a gain of 7.2% in July. Exports to the U.S. fell 33%, the fifth month of double-digit declines.
“The story is still that the tariff shock can be offset by a more diversified market and strength in manufacturing goods for China,” said Michelle Lam, Greater China economist at Societe Generale SA. “Over the coming quarters, we should see some gradual slowdown further as U.S. demand slows. But the impact should be milder than we initially envisaged.”
The latest figures for August add to the picture of fracturing global trade flows after President Donald Trump’s tariffs of 55% on Chinese exports slashed direct demand from the U.S. By steering exports to markets outside America as import growth stayed weak, China has racked up a trade surplus of just over $785 billion in the first eight months of the year, almost a third more than during the same period of 2024.
(Bloomberg)
Companies have responded to higher U.S. tariffs by trying to seek out alternative markets or routing goods indirectly to the world’s biggest economy. Shipments to the 10-nation Southeast Asian trading bloc rose almost 23%, while exports to the European Union climbed 10% and those to Africa were up 26%.
Still, falling prices and cutthroat competition mean that many companies are in the red despite the rising export revenue, with industrial profits falling almost 2% in the year through July.
Export prices have fallen for almost every month since mid-2023, forcing Chinese firms to ship more goods to maintain the same revenue.
“The price drops likely reflect manufacturers’ partial absorption of U.S. tariff costs at the expense of profit margins, as well as discounting to move inventory in glut-laden sectors such as solar panels,” Maybank Securities analysts Erica Tay and Hak Bin Chua said in a report.
(Bloomberg)
The continued rise in volumes is visible in container data. Shanghai’s port handled a record number of containers last month and all terminals in China processed more than 6.5 million containers for each of the past five weeks.
Still, a persistent slowdown in shipments abroad will eventually put the brakes on the broader economy. While China has vowed to boost domestic consumption this year, exports still contributed to almost a third of growth during the first half, when gross domestic product expanded 5.3%.
But the economy decelerated across the board at the start of this quarter in July, raising the prospect that Beijing could roll out more supportive measures in the months ahead to offset the trade war’s impact.
For now, however, SocGen’s Lam said third-quarter GDP growth is “tracking at slightly below 5%, so the pressure to add stimulus may only be growing more visibly going into winter.”
Imports climbed 1.3% in August, leaving a trade surplus of $102 billion. China’s surplus is still on course to handily exceed last year’s record of almost $1 trillion, with overseas sales making up for weaker domestic demand.
Trade ties with the U.S. have stabilized after Trump extended a pause on higher tariffs for Chinese goods for another 90 days into early November. However, a gauge of China’s new export orders has been at a multi-month low, boding ill for foreign demand in the period ahead.
“Global demand may continue to see increased pressures, which will keep policymakers proactive in providing domestic support,” HSBC Holdings Plc economists including Erin Xin said in a report. “With external headwinds likely to continue, China will need to push out more demand-side policies to help support growth.”
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