China’s exports continued to expand due to demand for medical goods, electronics, and the effects of major trading partners gradually resuming business activities.
Exports rose 9.5% in dollar terms in August from a year earlier to $235.3 billion, the third-highest level on record, customs data showed. Both the value of shipments to the US and the bilateral trade surplus were at the highest levels since November 2018.
China’s exports have defied expectations this year, growing significantly faster than global trade due to strong demand for Covid-related goods. The gradual reopening of many economies in Asia and around the world has also increased appetite for Chinese goods, although it’s unclear how long the nation will continue to benefit from these factors.
“China’s surprising resilience in exports amid the global pandemic is due to some special factors,” said Lu Ting, chief China economist at Nomura International HK Ltd. That includes surging exports of personal protective equipment and work-from-home products as well as declining exports “from some emerging market competitors which are still severely hit by the pandemic.”
Textile exports including masks rose 33.4% in the first eight months in dollar terms from a year ago, according to the data released Monday in Beijing. Without the boost from medical-related goods, exports in March through July should have fallen an average of 3.1% each month, instead of the average 0.3% rise, according to a report from China International Capital Corp. economists led by Peng Wensheng published Sunday.
The boom in shipments may not last, according to Frederic Neumann, co-head of Asian economic research at HSBC Holdings in Hong Kong. Production outages elsewhere have propped up China’s exports, and concerns over renewed trade tension with the U.S. may also be prompting rushed shipments.
However, “as factories in the rest of the world come back on stream, and demand for Chinese-made goods normalizes, China’s export growth will re-align with global demand growth, which looks set to be sluggish over the coming years,” Neumann said.
What Bloomberg’s Economists Say...
The headline reading for exports likely overstates the recovery in external demand, with the acceleration reflecting a distortion from base effects more than the reality on the ground. Compared to July, shipments fell, and “the recovery in external demand may not be as smooth as the market has expected.”
-- David Qu, Bloomberg Economics
Imports fell 2.1% in August, the customs administration said Monday, leaving a trade surplus of $58.9 billion for the month.
The decline in imports is mostly due to falling prices, with the volume of shipments rising in line with the investment-driven recovery, according to a report from economists at Australia & New Zealand Banking Group.
The trade surplus with the U.S. was $34.2 billion, the highest since November 2018. China’s imports from the U.S. rose 1.8% in August while imports from Australia plummeted 26.2% as relations soured.
Bilateral trade is the one area of U.S.-China relations that hasn’t worsened recently, with both nations reaffirming their commitment to a phase-one trade deal. Officials have agreed to create conditions to push the deal forward, although with tensions on the rise, that could change.
“Exports to the U.S. continued to improve, partly a result of the front-loading due to concerns about escalating tensions,” said Tommy Xie, an economist at Oversea Chinese Banking Corp.