China's exports are expected to continue the slow recovery
China's August export figures fell short of expectations, yet the trend continued to show signs of gradual recovery, largely driven by a slow rebound in global demand. Despite the sluggish external demand, exports are anticipated to grow at a modest pace, with the year-on-year decline expected to narrow in the coming months.
According to data released by China Customs on September 11, the total value of China’s foreign trade in August reached $191.7 billion, with exports amounting to $103.7 billion and imports totaling $88 billion. This marked the second consecutive month where exports remained above the $100 billion threshold. After adjusting for seasonal factors, the year-on-year growth rates for exports, imports, and overall trade stood at 3.4%, 2.3%, and 1%, respectively.
Dong Xianan, chief macro analyst at Industrial Securities, noted that August’s imports dropped by 17% year-on-year, while exports fell by 23.4%. The seasonally adjusted growth rate was lower than previous months. However, exports showed some resilience, particularly in key markets. The U.S. and European economies reported positive indicators, with housing market recovery in the U.S. and higher-than-expected PMI and retail sales in Europe. Exports to the U.S. and Taiwan stabilized, while shipments to France rebounded sharply, suggesting a gradual recovery in consumer demand. Meanwhile, textile and garment sectors had not seen significant improvement before July, and it is unlikely these industries will meet expectations ahead of the holiday season.
Chen Yong, senior macro analyst at United Securities, emphasized that the August export numbers were significantly below forecasts, primarily due to weak external demand. Looking ahead, exports are expected to grow slowly, with the year-on-year decline gradually narrowing as overseas demand improves.
Yu Rongquan, investment director at Guo Rong Fund, stated that although August exports remained weak, a gradual improvement is expected by year-end, as international buyers begin to replenish their inventories.
Xing Weiwei, a macroeconomic analyst at CIC Securities, highlighted that the global economy is showing more optimism, with the U.S. economy turning positive. He expects export growth to turn positive by the end of the year.
Li Mingliang, an analyst at Haitong Securities, noted that while import data met expectations, the export performance was slightly weaker than anticipated, mainly due to weak foreign demand. He forecasted that export growth in the first half of 2010 would range between 0% and 5%. From a policy perspective, most export support measures have been exhausted, and the exchange rate has remained stable, leaving limited room for further policy intervention.
Additionally, August’s import data remained in a historically high range. Dong Xianan pointed out that industrial product imports began to slightly decline after a rapid recovery from December 2008 to May 2009, but they still remain in a high-growth zone. The PMI index for the manufacturing sector in CFLP remained stable. After adjustment, the import-to-annual import ratio in August reached 22.5%, indicating that the decline in imports is unlikely to accelerate in the near future.
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