Chinese economy gets welcome boost thanks to surprisingly strong exports in August

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BEIJING (Reuters) – Chinese exports unexpectedly increased at a faster pace in August on strong global demand, helping to ease some of the pressure on the world’s second-largest economy as it weaves its way through headwinds on several fronts.

The Asian giant has staged an impressive recovery after a crisis caused by coronaviruses, but economic momentum has recently weakened due to the COVID-19 outbreaks caused by the Delta variant, high commodity prices, the slowdown in the economy. activity of factories, stricter measures to control house prices and a campaign to reduce carbon emissions.

Shipments from the world’s largest exporter in August were up 25.6% year-on-year, accelerating from a 19.3% gain in July, customs data showed on Tuesday, indicating some resilience in China’s industrial sector.

Analysts polled by Reuters had forecast growth of 17.1%.

“While short-term headwinds remain, supply constraints in China have eased and we believe the global economic recovery will continue to support Chinese exports later this year and into 2022,” said Louis Kuijs, manager. of the Asian economy at Oxford Economics.

Exports from neighboring countries also showed encouraging growth last month, with South Korean shipments accelerating due to strong foreign demand.

The distribution of shipments showed a widespread increase in all types of commodities, said Sheana Yue, assistant economist at Capital Economics.

“In particular, the rebound in Chinese-made consumer goods such as electronics, furniture and hobbies may have reflected advanced economy retailers restocking their stocks ahead of the Christmas shopping season,” Yue said. .

In addition, some of the traffic congestion at the port appears to have dissipated, which gave Chinese shippers a boost last month.

Eastern coastal ports suffered traffic jams as a terminal at the country’s second-largest container port was closed for two weeks due to a COVID-19 case. This has put additional pressure on global supply chains already struggling with a shortage of container ships and high commodity prices.

The stretched global shipping capacity has left many boxes of finished goods piled up in Chinese factories, a factor that is expected to increase the number of Chinese exports in the coming months, said Meng Xianglong, founder of Heji Trade & Credit Research. Center based in the port city of Ningbo.

“I think China’s robust export growth is expected to continue until the end of this year (around Christmas) or even early next year,” Meng said, adding that some factories were fully booked until the first quarter of 2022.

MORE STIMULUS AT TAP?

However, behind the big, robust numbers, companies are struggling on the ground. Companies faced increasing pressure https://www.reuters.com/world/china/chinas-factory-activity-expands-slower-pace-august-official-pmi-2021-08-31 in August as factory activity was growing at a slower pace while the service sector collapsed in the contraction. A global semiconductor shortage has added to the pressure on exporters.

The country appears to have largely contained the latest outbreaks of the coronavirus of the more infectious Delta variant, but it has prompted measures including mass testing for millions of people as well as varying degrees of travel restrictions in August.

Many analysts expect the central bank to further reduce the amount of liquidity banks must hold as reserves later this year to boost growth, in addition to the July cut https://www.reuters.com / article / us-china-economy -rrr-cut-idUSKCN2EF0U4 which has freed approximately 1,000 billion yuan ($ 6.47 billion) of long-term liquidity in the economy.

Imports rose 33.1% year-on-year in August, beating an expected gain of 26.8% in the Reuters poll, led by still high commodity prices and partly reflecting the statistical effect of weak figures from ‘one year ago.

Commodity prices remain high despite Beijing’s attempts to cool them down. In July, imports increased 28.1%.

Chinese coal imports in August rose 35.8% from a year ago due to tight domestic supply and strong demand, while iron ore imports also increased for the first time in five months.

China posted a trade surplus of $ 58.34 billion in August, compared to the poll’s forecast for a surplus of $ 51.05 billion and $ 56.58 billion in July.

The trade surplus with the United States – a source of friction for years between the two economic powers – reached $ 37.68 billion from $ 35.4 billion in July, according to Reuters calculations based on the data customs.

(Reporting by Colin Qian, Stella Qiu and Ryan Woo; Editing by Shri Navaratnam)

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