China’s exports unexpectedly fell in August as shipments to the US slowed sharply, with China expecting to announce more support measures soon to avert the risk of a sharp economic slowdown, the BBC reported.
August exports from the world’s second-largest economy fell 1% from a year earlier, the biggest fall since June, when they fell 1.3%, with analysts predicting a further slide as more US tariff measures will take effect on 1 October and 15 December.
“China-US trade friction has led to a sharp decline in China’s exports to the United States,” said Steven Zhang, chief economist and head of research at Morgan Stanley Huaxin Securities.
China’s August exports to the US fell 16% year-on-year, slowing sharply from a decline of 6.5% in July. Meanwhile, imports from the US slumped 22.4%. The fall is most likely connected to escalations in August in the year-long trade row, with Washington announcing 15% tariffs on a wide range of Chinese goods from September, with China hitting back with tariffs of its own. The next round of trade talks is expected to be held in October.
Exports to Europe, South Korea, Australia, and Southeast Asia also worsened on an annual basis compared with July, while shipments to Japan and Taiwan posted slightly better growth than the previous month.
On Friday, the central bank cut banks’ reserve requirements for a seventh time since early 2018 to free up more funds for lending, days after a cabinet meeting signalled that more policy loosening may be imminent. Earlier, as the announcement of 15% tariffs on a wide range of Chinese goods came, China let its yuan currency fall sharply to offset some of the tariff pressure.
Meanwhile, Asia markets edged up Monday morning amid rising expectations that Beijing may introduce more stimulus measures to prop up its economy. The Chinese central bank said the reserve requirement ratio would be cut by 50 basis points and it would further reduce that ratio by 100 basis points for some qualified banks.
“Looking ahead, we expect China’s export outlook to remain gloomy,” Louis Kuijs, head of Asia economics at Oxford Economics, wrote in a Sunday note. “The additional tariffs imposed by the US on 1 September and those scheduled for October 1 will further dampen export growth momentum.”
“In our view, more significant steps are needed if policymakers want to stabilize growth next year at around 5.7%, which we think they do. In this setting we expect more visible improvements in imports further down the road,” Kuijs added.