China's export growth offsets imports dip

China's foreign trade rose 6 percent year on year in August, with positive growth in exports offsetting a dip in imports, according to customs data.

In the first eight months, overall foreign trade fell by 0.6 percent year on year to total 20.05 trillion yuan (US$2.93 trillion). Exports added up to 11.05 trillion yuan, an increase of 0.8 percent from a year earlier, while imports fell by 2.3 percent to 9 trillion yuan, expanding the trade surplus by 17.2 percent to 2.05 trillion yuan, the General Administration of Customs said on Monday.

In August, China’s foreign trade rose 6 percent compared with the same month last year to top 2.88 trillion yuan, with exports growing by 11.6 percent and imports down by 0.5 percent.

In US dollar terms, meanwhile, China’s export growth surprised markets, rising to 9.5 percent year on year in August from 7.2 percent in July, while import growth dropped 2.1 percent year on year compared with the 1.4 percent decline over the same period. This resulted in a trade surplus of US$58.9 billion in August, down slightly from US$62.3 billion in July.

China’s surprising resilience in exports amid the global pandemic is due to factors that include a surge in exports of personal protective equipment and work/study-from-home products, and a decline of exports by some emerging market competitors which remain severely affected by the pandemic, according to Nomura, the Japanese financial services company.

The company highlighted China’s 23.5 percent year-on-year computer export growth in dollar terms in August, saying it “might especially be bolstered by back-to-school (online) demand as the summer holiday came to an end.”

“The stronger-than-expected export growth could also mean that industrial production growth in August might beat our forecast of 5.3 percent and the market consensus forecast of 5.2 percent,” said Lu Ting, Nomura’s chief China economist. “We thus update our IP growth forecast for August to 5.5 percent year on year.”

By contrast, import growth fell slightly in August, driven by weaker non-oil ordinary imports, the growth of which slumped to 2.2 percent year on year from 10.2 percent in July.

Lu noted that the trade surplus sure could lend further strength to the yuan against the dollar, but a worsening US-China bilateral relationship might also add downside risks.

The Association of Southeast Asian Nations has been China's largest trading partner over the eight months. China's foreign trade with ASEAN topped 2.93 trillion yuan, an increase of 7 percent, to account for 14.6 percent of China's headline foreign trade figure in the January-August period.

Trade with the European Union added up to 2.81 trillion yuan, up 1.4 percent, making the EU China’s second-largest trading partner.

China's trade with the United States, however, declined from a year earlier, with the value down 0.4 percent to 2.42 trillion yuan over the period.

Customs highlighted rapid growth in foreign trade by private enterprises. In the first eight months, they contributed 9.21 trillion yuan to China's exports and imports, jumping 8.5 percent year on year, accounting for 45.9 percent of the total foreign trade value which was 3.9 percentage points higher than in the same period last year.

Of this total, private enterprises posted overall exports of 6.07 trillion yuan, up 8.3 percent, accounting for 54.9 percent of the total value of China's exports, while imports increased by 8.9 percent to 3.14 trillion yuan, accounting for 34.9 percent of the headline imports.

During the same period, foreign-invested enterprises contributed imports and exports of 7.74 trillion yuan, accounting for 38.6 percent. State-owned enterprises' imports and exports topped 3.02 trillion yuan to account for 15.1 percent of the total.

Also, the structure of trade pattern has been continuously optimized, with the proportion of general trade in the country's overall foreign trade growing larger.

In January-August, China's general trade edged up 0.5 percent to 12.09 trillion yuan, accounting for 60.3 percent in total imports and exports which was 0.7 percentage points higher than in the same period last year.

In terms of sectors, exports of mechanical and electrical products rose 2.1 percent to account for 58.5 percent of the headline exports. Also, exports of textiles, including face masks, surged 37.8 percent in the first eight months from a year earlier.