Chinese imports and exports both dropped in August. Imports dropped 14.3% on year in renminbi terms, while exports dropped a modest 6.1 percent from last year – an improvement from the 8.3 percent drop in July.
The data means that China is now buying less from overseas and generating less from its shipments.
The drop in August is the tenth consecutive decline in the value of imports and the steepest monthly decline since May.
As a result, China’s monthly trade surplus grew by almost 40% from July to 368 billion yuan ($57.8 billion) in August.
While an expanding trade surplus may look like good news, it really isn’t. It has occurred because domestic demand has plummeted and lower commodity prices.
In US dollar terms Chinese exports in August fell 5.5% from the previous year and imports dropped 13.8%.
“The August data followed the trend set in July,” Ma Guangyuan, an independent Chinese economist, told the Financial Times, “Now the global slowdown has very much become a reality.”
Xiao Shijun, an analyst at Guodo Securities in Beijing, told the BBC: ”Chinese investors are now poised to expect a slew of weak economic data ranging from foreign trade to PMI to industrial output,”
He added that investors were “no longer nervous about relatively poor figures. So unless there are fresh surprises on the downside, market impact will be limited”.
Li Jian, head of foreign trade research at the Commerce Ministry’s think-tank in Beijing said that “the yuan devaluation will have limited impact on exports,” adding that “exports are falling because demand is weak, not because the price is not good.”
“Given the Chinese economy’s weak growth and deep-seated structural challenges, we expect renminbi depreciation pressure to remain,” Nomura analysts wrote in a research note on Tuesday.
“However, unlike in the late 1980s and early 1990s, we expect this pressure to be moderate and prolonged, rather than sudden and severe.”