China is under pressure. The country’s exports are weaker than expected.
China’s foreign trade has suddenly lost its development momentum.
In August, exports calculated in US dollars increased by only 7.1 percent compared to the same period last year.
Experts had expected double-digit growth after exports rose 18 percent in July.
The reasons mentioned are the drop in world demand due to the increase in inflation and energy prices.
Production disruptions in China due to lockdowns as a result of the zero-covid-19 strategy and power shortages due to heat were also mentioned.
Imports increase very little
Imports of the second largest economy in the world have also developed worse than expected, as there was a minimal increase of only 0.3 percent.
In July, an increase in imports of 2.3 percent was noted.
According to experts, the background of this slow growth is the bad mood among Chinese consumers and the crisis in the real estate market in China.
The trade surplus was also below expectations, at just $79 billion. Despite the generally weak development of imports, there was also good news for German exporters in China.
Despite the crisis and major problems, German exports to China have increased by 4.9 percent.
“The bigger-than-expected slowdown in China’s export growth is another sign that the country’s economic recovery is losing momentum – and needs more political support.
We expect trade to remain under pressure for the rest of the year,” said David Qu, chief economist at Bloomberg Financial.
Increasing business with Russia
China’s trade with Russia, against which international economic sanctions have been imposed due to aggression in Ukraine, continues to grow strongly.
China, which politically backs Russian President Vladimir Putin, imported 59.3 percent more from Russia in the period — mostly energy.
In contrast, Chinese exporters shipped 26.5 percent more goods to the neighboring country.
The European Union managed to increase its exports to China by 3.1 percent.
Conversely, China exported 11.1 percent more to the EU.
In trade with the US, on the other hand, both China’s imports and exports have fallen.
Chinese exports fell by 3.8 percent, while imports from the US fell by 7.4 percent.
Chinese economy under pressure
The Chinese economy was under pressure before. In the second quarter of the year, the increase was only 0.4 percent.
While the Government had set as a target an increase of 5.5 percent for this year. But the International Monetary Fund (IMF) expects annual growth of only 3.3 percent.
As a result of the disappointing economic developments, the Chinese yuan has marked a significant decline by 0.36 percent and is now worth 6.98 yuan to one dollar. Despite being at its lowest level in two years, the weakening yuan has not boosted Chinese exports.
The fall in the value of the local currency means that Chinese goods are on the international market at cheaper prices.
“The strong dollar is putting pressure on imports,” said Jones Lang Lasalle chief economist Bruce Pang. Due to these developments, the political leader in Beijing is also worried.
Vice Minister of Commerce Li Fei announced that the government will help foreign trade companies to protect themselves from exchange rate risks.