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China's trade performance shows weakness in August, exports and imports decline again

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2023-09-08

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In August, China's trade performance remained weak, with both exports and imports experiencing declines. While the situation was not as dire as July's slump, it still signaled the country's struggle with weak demand both domestically and externally.

Exports fell by 8.8% compared to the previous year, amounting to $US284.87 billion. This decline was less severe than the 14.5% drop seen in July, according to China's General Administration of Customs. The result surpassed the expectations of forecasters, who had anticipated a 10.0% fall.

Chinese imports also decreased by 7.3% in August, totaling just over $US216 billion. This decline was less pronounced than the 12.4% drop observed in July and the 9.7% decrease expected by economists.

Both export and import values were affected by the depreciation of the yuan, which hit a 16-year low against the US dollar in August. This resulted in China's trade surplus shrinking to $US68.36 billion, marking a 13% decrease from the $US80.6 billion surplus in July and falling short of the forecasted $US73.8 billion surplus.

Despite the overall weakness, there were some positive developments. Imports of iron ore, coal, copper ore and concentrates, LNG, and oil increased in August compared to both July and the previous year when Covid restrictions suppressed demand. Coal imports, in particular, reached a record high of over 44 million tonnes, while iron ore imports exceeded 106 million tonnes.

However, imports of copper metal, meat, and steel products declined. August's weakness extended the trend of declining Chinese imports throughout 2023 compared to the year-ago period, while exports have been decreasing year-on-year since April due to weak global demand for products manufactured in China.

For the first eight months of the year, exports contracted by 5.6% compared to the same period in 2022, amounting to $US2.22 trillion. Reuters' analysis revealed that China had a $US6.2 billion trade deficit with Australia, exporting over $US12 billion worth of products in August, primarily iron ore, coal, copper, lithium, and LNG, while importing just over $US6 billion worth of goods, including electric vehicles, especially from companies like Tesla and BYD.

China maintained a trade surplus with the US ($US33.1 billion) and ASEAN ($US10.5 billion).

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