China"s exports rise 8.7% in August amid slowing economy

In August, China’s exports rose by 8.7% year-on-year, reaching $308.65 billion, marking the fifth consecutive month of growth. This increase surpassed economists' expectations of 6.5% and was a significant improvement from the 7% rise in July. The strong performance is attributed to a low comparison base from August 2022, when exports had declined by 8.8%. Meanwhile, imports only grew by 0.5%, falling short of the anticipated 2% increase, indicating a slowdown in domestic demand. The trade surplus widened to $91.02 billion in August, up from $84.65 billion in July, reflecting the robust export growth. The Association of Southeast Asian Nations remained China’s largest trading partner, with exports to ASEAN, the United States, and the European Union all increasing compared to the previous year. Despite the positive export figures, domestic demand remains a concern, as evidenced by a consumer price index increase of only 0.6% in August, which was below forecasts. The core consumer price index, excluding food and energy, rose by just 0.3%, the slowest growth in over three years. Additionally, manufacturing activity in China fell to a six-month low, with the Purchasing Managers' Index dropping to 49.1, indicating a contraction in the sector. This decline in manufacturing activity highlights the challenges faced by the Chinese economy, which is still recovering from the pandemic. Experts suggest that while exports may remain strong in the near term, driven by external demand and a favorable exchange rate, the domestic economy needs to improve to sustain overall growth. Increased fiscal spending and a potential rebound in imports could help bolster industrial demand moving forward.