Economy

China export boost might be short-lived as US tensions rise

Upbeat numbers amid the Covid-19 pandemic fail to hide a drop in imports and ballooning surplus with America

A jump in exports for the third consecutive month fueled China’s August trade numbers.

The upbeat figures overshadowed a fall in imports as the global economy struggled to shake-off the fallout from the Covid-19 pandemic.

“China’s exports continue to defy expectations and to grow significantly faster than global trade, thus gaining global market share,” Louis Kuijs, of Oxford Economics, said.

On Monday, the General Administration of Customs reported that exports last month increased by 9.5% compared to the same period in 2019. 

Rising tension

At the same time, China’s trade surplus with the United States came in at US$58.93 billion despite rising tension between the world’s two leading economies.

Beijing also failed to meet its quota to purchase more goods and products under a phase one trade deal, while overall imports slumped by 2.1% for the month.

Once European or American households have bought one laptop or game consoles, they are not going to continue to buy these type of goods for the foreseeable future

Bo Zhuang, the chief China economist at TS Lombard

Again, growth was boosted by a continued surge in medical equipment and products, such as protective clothing, and electronic items. But the upward trend could be short-lived.

“Once European or American households have bought one laptop or two game consoles, they are not going to continue to buy these type of goods for the foreseeable future,” Bo Zhuang, the chief China economist at TS Lombard, said as reported by the CNBC television network.

Coronavirus gloom

Last week, data showed that factories across Europe, Asia and North America continued to pierce through the coronavirus gloom in August. But how long that will last is open to debate as coronavirus infections worldwide continue to rise.

“With concerns about double-dips increasing and virus cases up across Europe, the PMI [Purchase Managers Index] – especially on the services side – provides reason to worry about the pace of the recovery and perhaps even a reversal of output growth,” Bert Colijn, of the multinational banking group ING, said.

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