Exports strengthen China's recovery by scoring its third consecutive monthly rise

Visitors at a trade fair in China this Sunday.Ng Han Guan / AP

China strengthens the recovery of its economy with a new increase, for the third consecutive month, in its sales abroad.

The gradual return of activity in its main trading partners led the world's second largest economy to shoot its exports in dollars in August by 9.5% in August compared to the previous year, the largest increase since March 2019. The figure exceeds both growth expectations for this month and the increase recorded in July (7.2%) and raises the Asian giant's trade surplus to 58.93 billion dollars (49.76 billion euros).

The increase in local currency (yuan) was even more notable: over 11%.

The other side of the coin is imports - a good approximation to domestic consumption - which fell by 2.1%, despite forecasts pointing to a minimal rise of 0.1%.

The export pull suggests a faster and more balanced recovery in the Chinese economy, which is recovering from a record decline in the first quarter thanks in large part to domestic stimulus measures.

"Exports continue to defy expectations and grow significantly faster than world trade, thus gaining world market share," says Louis Kuijs of Oxford Economics.

China was the first country to be hit by the virus that originated in Wuhan and all the data suggests that it will also be the first of the big ones to come out of the hole.

“Exports have been surprisingly resilient in recent months thanks to early normalization of production and fiscal support measures in other countries.

Although these effects could persist in the coming months, they are likely to stabilize towards the end of the year ”, completes Stephanie Altermatt, an economist at the Swiss bank Julius Baer.

Chinese exports were boosted in August by record shipments of medical supplies and strong demand for electronics, and they weathered the storm of the world's biggest recession in decades far better than most analysts initially feared.

Greater production

Higher sales abroad have also pulled production.

The latest surveys on manufacturing activity suggest that Chinese factories registered their first increase in new export orders this year in August, as foreign demand gradually returned to normal, in a clear rebound effect after a dismal months .

On the decline in imports, Julian Evans-Pritchard, of Capital Economics, remarks that, although they have fallen more than expected, they remained largely stable in terms of volume.

"With accelerated credit growth and stimulus driven by infrastructure, which continues to increase, import volumes should remain strong in the coming months," he says in a note to clients.

However, China's recovery, like that of the rest of the world, hangs by a thread: a new outbreak of the virus in any of its trading partners this fall could ruin it.

It is also expected that the tensions with the United States, which have already increased, will intensify before the presidential elections in the world's leading power: for Trump it is a very juicy electoral trump card.

China's trade surplus with the North American country widened to $ 34.24 billion in August from $ 32.46 billion in July.

Senior US and Chinese trade officials reaffirmed their commitment to a trade deal in a phone call last month.

In order to minimize future episodes of volatility, Beijing has redoubled its commitment in recent months to reduce its dependence on foreign markets for its development, which in the future will rely more on its powerful domestic market.