Caixin
Sep 07, 2021 03:31 PM
ECONOMY

China Trade Surges to New Records on Strong U.S., EU Demand

Shipping containers sit dockside at Tianjin Port in Tianjin on Sunday. Photo: Bloomberg
Shipping containers sit dockside at Tianjin Port in Tianjin on Sunday. Photo: Bloomberg

(Bloomberg) — China’s export growth unexpectedly surged in August as suppliers likely boosted orders ahead of the year-end shopping season, offsetting any port disruptions due to fresh outbreaks of the delta virus.

Exports rose 25.6% in dollar terms from a year earlier to a record $294.3 billion, more than $10 billion above any previous month. Imports grew 33.1% to $236 billion, also the highest level ever, leaving a trade surplus of $58.3 billion for the month, the customs administration said Tuesday.

Trade Chart

The pickup came despite disruptions at China’s second-largest port last month due to fresh virus outbreaks, which caused congestion and pushed up shipping costs. Global demand remained resilient, especially from the U.S. and Europe, as retailers probably brought forward their Christmas shopping orders.

“The hot season for Christmas came earlier than previous years,” said Xing Zhaopeng, senior China strategist at Australia and New Zealand Banking Group Ltd. in Shanghai. New products from Apple Inc. created demand, while delta virus outbreaks in Southeast Asia probably caused orders to be diverted to China, he said. “It will remain strong before November,” he said.

The top three exports by value were electronics, high-tech products, and clothing and clothing accessories, while the top imports were electronics and high-tech products, the data showed.

“The strength likely reflects robust external demand as well as diverted orders from Covid-disrupted rival exporters. Looking ahead, though, export growth could cool in the fourth quarter as weaker new export orders hit shipments and the year-earlier base becomes less favorable,” said Eric Zhu, Bloomberg’s China economist.

Signs of a slowdown are starting to emerge globally though as Covid cases rise, and officials in China have warned of weaker export growth for the rest of the year as risks build.

Manufacturing surveys last week showed a contraction in new export orders for a fourth consecutive month in August, which may signal a slowdown in the future. Beyond trade, the economy is taking a knock from a plunge in services activity related to Covid restrictions, a tightening in property curbs and lower infrastructure spending.

China’s effective control of virus cases may have led suppliers to divert orders from other Asian countries, which are battling delta outbreaks and struggling to keep manufacturing operations going. That advantage could ease though once the pandemic is contained elsewhere.

Contact editor Michael Bellart (michaelbellart@caixin.com)

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