China: Exports drop in August as shipments to the U.S. nosedive
In August, exports fell 1.0% over the same month last year. The printed contrasted both the 3.3% increase in July and the 2.1% growth expected by market analysts. August’s contraction mostly reflected a sizeable drop in shipments to the United States.
Imports fell 5.6% in annual terms in August, following July’s 5.3% drop. The reading was better than the 6.0% decline that market analysts had projected.
As a result of the sharp decrease in imports, the trade surplus rose from USD 26.3 billion in August 2018 to USD 34.8 billion in August 2019 (July: USD 44.6 billion surplus). The 12-month moving sum of the trade surplus increased from USD 413 billion in July to USD 421 billion in August.
Against this backdrop, Iris Pang, Greater China economist at ING, comments that:
“We think exports will continue to be weak as we don’t expect any material progress in the coming trade talks. Both sides seem to be standing firm, and are unlikely to give concessions anytime soon. China has two key demands: 1) that the US respect the pace of change in China’s intellectual property laws 2) that the US withdraw all tariffs. For the US, this seems to be very difficult to swallow. As such, there is little chance that we’ll see progress in trade talks, which means China’s exports will continue to face headwinds.”