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China's trade decline narrowed in August, with signs of stabilization emerging


  China's exports and imports continued to fall in August, albeit at a slower pace than expected, as Chinese companies were squeezed by the twin pressures of weak overseas demand and weak domestic consumption.

  Customs data showed exports in August were -8.8 per cent from a year earlier, better than the -9.2 per cent forecast in a Reuters poll and -14.5 per cent the previous month. Imports, meanwhile, contracted 7.3%, below expectations of -9.0% and last month's -12.4%.

  Analysts have cut their forecasts for this year because of the housing slump, weak consumer spending and declining credit growth.

  Mr Neumann, chief Asia economist at HSBC Holdings, said: "The trade data is slightly better, but I don't think we should read too much into it - trade is still contracting. There are some signs of stabilization here, but I think there is still a long way to go."

  Zhou Hao, chief economist at Guotai Junan International, said: "The data shows that despite a slight improvement, headwinds still exist. Looking ahead, whether China's trade growth has bottomed out will depend on several factors, the most important of which is obviously domestic demand."

  The Chinese government has announced a series of measures to boost economic growth in recent months, and last week the central bank and top financial regulator eased some lending policies to help home buyers.

  But the market believes these measures are likely to have little impact due to a slowing labor market recovery and uncertain household income expectations.

  Countries around the world are worried about China's economic slowdown, and many exporters are highly dependent on the Chinese market for growth. Korea's (KOR) exports to China, a leading indicator of Chinese imports, fell only 20% last month, slowing from a 27.5% decline a month earlier, another sign that conditions in China are stabilizing.

  But trade with Japan (JPN) is still falling sharply, with exports to its neighbour down 20 per cent year on year in August and imports worsening by 17 per cent.

  In addition, China's trade surplus in August was $68.36 billion, compared with expectations of $73.8 billion and July's figure of $80.6 billion.

  "There is a high possibility that exports will resume growth at the end of this year due to the low base at the end of last year," said Nie Wen, an economist at Huabao Trust.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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