Home Markets As Trade War Pushes on, China’s Exports Take A Deep Dive

As Trade War Pushes on, China’s Exports Take A Deep Dive


The exports from China had a surprising fall in August as cargoes to the US had dramatically slowed down. This is showing a significant weakness of China and emphasizing the stronger demand for more actions as China versus the USA trade war intensifies.

There is a pressuring expectation for Beijing to announce growth-inducing actions in the next few days to safeguard and stop the economy from slowing down even more.

Last Friday, the primary bank sliced the banks’ reserve equipment for the seventh time. This is to clear more assets for lending after a meeting discussion by the cabinet has triggered signals to loosen some policies sometimes sooner.

August exports from last year fell 1% from the same month the year before. This is actually the most significant decline since June while the data was recorded at 1.3%. Analysts had been expecting an increase of 2.0% after a gain of 3.3% in July, but they were wrong.

That data is despite the expectations that the weakening yuan could offset the pressure on costing and that imposing more massive tariffs could provoke some Chinese companies to deliver their shipments bound to the US this August. This is a trend that was seen through the earlier trade dispute.

Reports show that China has let its yuan dive down past the crucial 7 per dollar recorded last month. This was the first occurrence since the worldwide financial crisis. This move was interpreted by Washington as a money manipulator.

According to Zhang Yi, an economist at Zhong Hai Sheng Rong Capital Management, “Exports are still weak even in the face of substantial yuan currency depreciation, indicating that sluggish external demand is the most important factor affecting exports this year.”

In terms of export, China’s recorded trade to the US fell 16 percent compared to last year. It has been sharply diminishing from a drop of 6.5% in July. Their imports from the US has collapsed at 22.4%.

Several financial experts expect some growth of their exports to slow down even further in the coming months. It was also proven by some evidence of aggravating export state in both private and official company surveys. Additional US tariff actions will be implemented on October 1 and December 15.

According to the Morgan Stanley Huaxin Securities chief economist and head of research, Steven Zhang, “The China-U.S. trade friction has led to a sharp decline in China’s exports to the United States.”

If compared with July data of the last year, exports to Southeast Asia, Australia, Australia, and  Europe have also been affected if looking at things from an annual perspective. On the other hand, imports to Taiwan and Japan have shown an improvement compared to the previous month’s performance.

This report published on Sunday has also shown how China’s imports slumped for the fourth successive time since April of this year. For on-year comparison, imports have fallen 5.6% in August, which is a little less than the expected 6.0% decline and has unchanged from the 5.6% slump recorded in July.

The slowing domestic demand is more likely the primary reason in the slump, partnered with weakening prices in the global trade. The domestic consumption in China, as well as local investment, have remained ineffective in spite of the continued boosting measures planned by the government.

Dramatic escalations have been all over August in the year-long war between the two major global players, as Washington has announced 15 percent more tariffs on an extensive selection of Chinese commodities from September 1. China has retaliated with some levies and allowed its currency to fall to offset the taxing pressure.

Both countries have agreed to pursue discussions and continue principal negotiations in the first days of October. This meeting will be in-person, following the failed face-to-face meetings at the end of July.