China's foreign trade increases 10.1% in first eight months

China’s foreign trade is expected to expand steadily in the coming months, driven by the government’s supportive policies and the resilience of its industrial chain in the electro-mechanical industry, experts said. In August, the value of China’s foreign trade in goods grew 8.6% year-on-year to CNY3.71 trillion, and the figure reached CNY27.3 trillion in the first eight months of this year, up 10.1% year-on-year, according to the General Administration of Customs (GAC). Though the growth rate in August was slower compared with July’s 16.6% year-on-year growth, due to the high base last year and a weakening in global demand, China’s foreign trade will be able to maintain double-digit growth in the second half of the year, and is expected to be a major driver of economic growth this year. “Many global orders are likely to flow back to China in the fourth quarter as infections with Omicron’s new sub-variants have soared in Vietnam, disturbing its supply chain for foreign customers, especially in labor-intensive manufacturing,” said Bai Ming, Deputy Director of International Market Research at the Chinese Academy of International Trade and Economic Cooperation in Beijing.

“Bilateral and multilateral free trade deals, such as the Regional Comprehensive Economic Partnership agreement, will be practical tools for China to put its foreign trade growth on a firmer footing,” Bai added. The surging cost of production materials and energy prices in Europe and South Korea, as well as declining international shipping freight costs, will ensure global continued demand for Chinese products in the coming months, said Su Qingyi, Researcher at the Chinese Academy of Social Sciences’ Institute of World Economics and Politics in Beijing. China’s trade with member states of the Association of Southeast Asian Nations (ASEAN) soared 14% on a yearly basis to CNY4.09 trillion between January and August. In addition, its trade with the European Union rose 9.5% to CNY3.75 trillion.

Total trade between China and the United States grew 10.1% year-on-year to CNY3.35 trillion. The country’s supportive policies, such as accelerating the negotiation of free trade agreements with more countries and encouraging new trade formats including cross-border e-commerce, will further boost exports, said Ministry of Commerce Spokeswoman Shu Jueting.

Exports of electro-mechanical products, such as computers, vehicles and smartphones, rose by 9.8% year-on-year to CNY8.75 trillion between January and August, accounting for 56.5% of the nation’s total export value. Zhou Maohua, Analyst at China Everbright Bank, said the double-digit foreign trade growth in the first eight months of the year reflected China’s thriving manufacturing sector and its complete supply chain. “China’s export structure has been notably optimized, with the exports of electro-mechanical products proportionately increasing in foreign trade,” said Zhou. He said the export growth of China’s labor-intensive products also demonstrates that the country’s competitiveness in this sector, which has remained cost-effective despite high inflation in many overseas markets. China’s exports of labor-intensive products surged 14.1% year-on-year to CNY2.81 trillion in the first eight months, the China Daily reports.

The South China Morning Post adds that imports grew by 0.3% in August from a year earlier to USD235.53 billion, down from 2.3% growth in July. “Export growth slowed due to weakening external demand. China needs to rely more on domestic demand than exports, as the global economy is likely to slow down,” said Zhang Zhiwei, Chief Economist with Pinpoint Asset Management. “The key challenge China faces is how to strike a balance between domestic economic activities and containing Covid outbreaks.” China’s total trade surplus was USD79.39 billion in August, compared with an all-time high of USD101.26 billion in July. “Export volumes fell by the most since March, in a sign that slowing global growth and the normalization of consumption patterns is starting to weigh on demand for Chinese goods,” said Sheana Yue, China Economist at Capital Economics.

China’s imports from Russia surged by 59.3% to USD11.2 billion in August, while exports increased by 26.5% to USD7.996 billion. Following the news that the Biden administration will allow Trump-era tariffs on hundreds of billions of dollars of Chinese merchandise imports to continue while it reviews the need for the duties, imports from the United States declined by 7.4% from a year earlier to USD13 billion in August, while exports fell by 3.8% to USD49.8 billion. In August, China’s trade surplus with the U.S. narrowed by 2.4% from a year earlier to USD36.8 billion, down from USD41.51 billion in July.