BEIJING, Sept 8 (Reuters) – China’s export growth quickened last month, buoyed by strong overseas appetite for high-tech and AI-related products, providing vital support for an economy weighed down by sluggish domestic demand.
The divergence between resilient exports and weak activity at home highlights Beijing’s continued dependence on foreign demand, with policymakers struggling to revive consumption and investment as they pursue a 4.5%-5% growth target this year.
Exports expanded 25% year-on-year in August in U.S. dollar terms, matching forecasts and accelerating from the 23.9% growth in the previous month, customs data showed on Tuesday.
Imports soared 28.2%, compared with a 27.5% year-on-year increase in July and a forecast for a 30% rise.
Strong demand for AI products as well as electric vehicles, solar cells and lithium-ion batteries offset the impact from weather events, said Zhaopeng Xing, ANZ’s senior China strategist.
Xing noted that companies were still rushing to send goods to the United States due to tariff uncertainties.
While the AI boom lifted the profits of advanced manufacturers, industries relying on the domestic market have been grappling with producer price inflation and soft demand.
Relying on outbound shipments to absorb industrial capacity also exposes China to risks of curbs from trading partners, as the U.S. and the European Union have both demanded Beijing lower its trade surpluses.
China’s trade surplus rose to $119.09 billion in August, expanding from $112.5 billion the previous month. The surplus in the first eight months reached $805.51 billion, putting the annual number on track to top $1 trillion for the second year.
The trade surplus with the U.S. rose to $29.18 billion from $28 billion in July.
A trade truce between Beijing and Washington, reached late last year when the two countries’ presidents met, has held despite on-and-off frictions. The two governments are now exploring reciprocal tariff cuts on $30 billion worth of goods from each side as they prepare for another summit later this month.
DEPENDENCE ON EXTERNAL DEMAND
“China continues to rely on the exporters to support the economy,” said Zhiwei Zhang, president and chief economist of Pinpoint Asset Management.
After growth cooled to 4.3% in the April-to-June period, economic data released last month showed industrial output and retail sales both slowed at the start of the third quarter, while fixed-asset investment recorded a sharper decline in the first seven months. The property market, once a major growth driver, is still in a years-long downturn.
Premier Li Qiang, the country’s No. 2 leader, in August called for efforts to stabilise external demand and expand international trade cooperation while acknowledging insufficient domestic demand, hardships facing industries and companies as well as rising uncertainties in the international environment.
The government has stepped up fiscal support for the economy, including deploying an 800 billion yuan ($119.21 billion) financing tool to shore up infrastructure investment. But the strength in exports relieves Beijing of immediate large-scale actions to boost household income, improve job security and revive the property market.
“The latest trade data do not materially strengthen the case for an imminent interest rate cut,” said Hao Zhou, a Hong Kong-based analyst at Guotai Haitong Securities.
“While further policy support cannot be ruled out, the combination of resilient external demand, steady industrial momentum, and increasingly targeted fiscal measures implies that the timing and necessity of additional monetary easing will require further observation.”
($1 = 6.7108 Chinese yuan renminbi)
(Reporting by Yukun Zhang, Tina Qiao and Liz Lee; Editing by Shri Navaratnam)
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