Finbarr Bermingham:

“…China’s exports fell unexpectedly in August as the trade war with the United States continued to hit the world’s second-largest economy.

Shipments fell by 1 per cent in the month after growing 3.3 per cent in July in dollar terms, and below the 2.1 per cent growth expected by analysts in a Bloomberg poll. Imports in the month dropped by 5.6 per cent, leaving a trade surplus of US$34.84 billion, according to China’s General Administration of Customs.

July’s expansion now seems like an anomaly, likely driven by front-loading as new tariffs of 15 per cent on about US$110 billion of Chinese goods that took effect on September 1. American buyers of Chinese goods subject to the new tariffs were likely to have filled their inventories as much as possible before the goods became more expensive to import.

Furthermore, the much-reported 3.8 per cent depreciation of the yuan in August failed to stop the decline in exports – despite Washington’s fears that it was being used to give China’s exporters an unfair advantage.

It is a far cry from the double-digit expansion that characterised the export machine that powered the Chinese economy for more than two decades.

China’s exports to the US in August dropped 16 per cent to US$37.3 billion, a stepper decline from the 6.5 decrease in July. Imports, meanwhile, dropped by 22.3 per cent to US$10.35 billion having decreased by 19.1 per cent in July. Overall, China now has a trade surplus of US$26.95 billion.

The weak export figures will put further pressure on China’s already slowing economy. The central bank on Friday said it would cut the amount of cash banks must hold as reserves to the lowest level since 2007 in a bid to inject liquidity into the economy and stimulate demand…”

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