Background
Economists had expected August trade numbers to be slightly worse. A Reuters poll forecast exports fell 9.2 percent in August from a year earlier, while imports fell 9 percent. Exports fell by 14.5 percent in July last month.
Many multinational companies, particularly large retailers in the United States, have become concerned about supply chains that depend on China as geopolitical tensions have increased in recent years, particularly as international trade disputes between the United States and China have intensified.
China’s strict “zero Covid” measures during the pandemic, notably the weeks-long lockdown of Shanghai, Shenzhen, Guangzhou and other major industrial centers and ports, have led to many shipping delays and many foreign managers leaving China for multinational companies.
With pandemic concerns now fading, households around the world, including in China, have shifted their spending patterns to travel, restaurant meals and other services. Many stockpiled manufactured goods during the pandemic, mostly from China, which has the world’s largest industrial sector.
These trends were reflected in the details of the August numbers. Exports of computers, where China has been the leader for many years, fell 18.2 percent in value from August 2022. Exports of medical and surgical equipment, which grew during the pandemic, fell 7.1 percent last month.
But exports of some products began to stabilize: Foreign sales of home appliances such as refrigerators and washing machines rose 11.4 percent in August, after falling in July.
Imports of agricultural products — which rely heavily on food from abroad as China improves its citizens’ diets — fell 7.9 percent from a year ago, while crude oil imports actually rose by half a percent.
Why is this important?
Each month’s export and import figures provide one of the earliest indications of how the Chinese economy fared in the previous month. China relies heavily on running huge trade surpluses each month as a way to create tens of thousands of jobs, and that’s especially important this year as youth unemployment soars.
Exports have become even more important in the past two years as China faces a sharp slowdown in its housing market, following years of rampant speculation that drove up apartment prices tenfold or more in many Chinese cities.
The data released on Thursday was the latest sign that overall demand for goods from China may have started to bottom out. “Lower negative exports and imports increase our confidence that July will be a bleak period for economic activity in China,” said Louis Lu, an economist at the Singapore Office of Oxford Economics.
Although China’s exports have been weak this year, they are coming down from the highest levels reached during the pandemic. The country is an industrial powerhouse.
“Export orders are not looking good to the US or Europe, but they are growing solidly in Asia and elsewhere,” according to a recent research note published by economic research group China Page Book.
