China exports fall amid trade war
Imports continue decline, Beijing expected to announce support measures
BEIJING China's exports unexpectedly fell in August while imports shrank for a fourth month, pointing to further weakness in the world's second-largest economy and underlining a pressing need for more stimulus as the Sino-US trade war escalates.
Beijing is widely expected to announce more support measures in the coming weeks to avert the risk of a sharper economic slowdown as the US ratchets up trade pressure, including the first cuts in some key lending rates in four years.
On Friday, the central bank cut banks' reserve requirements for the seventh time since early last year to free up more funds for lending, days after a Cabinet meeting signalled that more policy loosening may be imminent.
Last month's exports fell 1 per cent from a year earlier, the biggest fall since June, when it fell 1.3 per cent, customs data showed on Sunday.
Analysts had expected a 2 per cent rise in a Reuters poll after July's 3.3 per cent gain.
That is despite analyst expectations that looming tariffs may have prompted some Chinese exporters to bring forward or "front-load" US-bound shipments into August, a trend seen earlier in the trade dispute.
Many analysts expect export growth to slow further in coming months, as evidenced by worsening export orders in official and private factory surveys. More US tariff measures will take effect on Oct 1 and Dec 15.
Yesterday's data also showed China's imports shrank for the fourth consecutive month since April.
Imports dropped 5.6 per cent on-year in August, slightly less than an expected 6 per cent fall and unchanged from July's 5.6 per cent decline.
Sluggish domestic demand was likely the main factor in the decline, along with softening global commodity prices. China's domestic consumption and investment have remained weak despite more than a year of growth boosting measures.
China reported a trade surplus of US$34.84 billion (S$48 billion) last month, compared with a US$45.06 billion surplus in July. Analysts had forecast a surplus of US$43 billion for last month.
August saw dramatic escalations in the bitter year-long trade row, with Washington announcing 15 per cent tariffs on a wide range of Chinese goods from Sept 1.
Beijing hit back with retaliatory levies, and let its yuan currency fall sharply to offset some of the tariff pressure.
China and the US last week agreed to hold high-level talks in early October in Washington, the first in-person discussions since a failed US-China trade meeting at the end of July.
But there was no indication that any planned tariffs on Chinese goods would be halted.