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China's exports declined in August, signalling weak demand in regions such as Europe and adding to growth pressures facing the world's second-largest economy.
Overseas shipments fell 5.5 per cent from a year earlier in dollar terms, the customs administration said. The reading was slightly above the median forecast of a 6.6 per cent decline by economists surveyed by Bloomberg, and compared to an 8.3 per cent drop in July. Imports fell 13.8 per cent, widening from an 8.1 per cent decrease and leaving a trade surplus of $60.2 billion.
The data highlight tepid demand around the world and sliding prices for inputs to China's factories and their shipments abroad. Steps to boost growth include five rate cuts since November and the People's Bank of China's unexpected yuan devaluation last month.
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"China is set to miss its export growth target for this year, and there will be no help from the external demand side for economic growth," said Liu Xuezhi, a macroeconomic analyst at Bank of Communications Co in Shanghai. "China's modest yuan devaluation has yet to show any effect on exporters."
Shipments to the European Union declined by 7.5 per cent in August from a year earlier, while exports to the US slipped one per cent.
Weak exports mean China must do more to stabilise growth, Liu said. "The government is already trying hard to boost infrastructure spending, and that will be more important than exports for overall growth," he said.
Exports fell 1.4 per cent in the first eight months from a year earlier and imports declined 14.5 per cent. That compares with the government's goal of a 6 per cent increase in total trade this year.
Tianjin blast
For the first eight months of the year, shipments to the US and Association of Southeast Asian Nations rose, while exports to Hong Kong, Japan and Brazil dropped more than the overall slide. The chemical explosion in the northern port city of Tianjin weighed on shipments in August, though the impact may be short- lived, analysts at Goldman Sachs Group Inc led by Song Yu wrote in a report ahead of the data.
China's benchmark Shanghai Composite Index swung from a loss of 2.3 per cent to close 2.9 per cent higher Tuesday. The offshore yuan strengthened to 6.4646 against the greenback as of 4:20 pm in Hong Kong. The trade surplus widened from $43 billion in July.
Growth doubts
"China's growth is losing steam," said Zhao Yang, chief China economist at Nomura Holdings Inc in Hong Kong. Zhao expects the currency devaluation to have only a "minor" impact on trade volume.
China's exports may rise about 2 per cent this year while imports may slide about 10 percent, according to a State Information Center and China Development Bank report published by Shanghai Securities News last week.
Several PBOC interest rate cuts and stock-market volatility point toward "increasing misgivings over whether China actually retains the capacity to meet its projected economic growth targets," the European Union Chamber of Commerce in China said in its 2015-2016 position paper released Tuesday.
Imports have declined for 10 months straight, underscoring the impact of a prolonged property investment downturn and falling commodity prices. Imports from commodity exporters Australia and Brazil both declined by more than 20 per cent in the first eight months of the year.
Factories are buying less coal, aluminum, steel and copper, and Chinese consumers are also curbing some purchases. The number of cars imported fell by 25.6 per cent from a year earlier in the first eight months.
"The government needs to stimulate domestic demand through aggressive fiscal stimulus, particularly through policy banks investment in infrastructure projects," Nomura's Zhao said.
