Economist at UOB Group Ho Woei Chen, CFA, comments on the latest release of trade balance results in China.

Key Takeaways

“Both China’s export and import growth rates moderated by a sharper-than-expected pace in Aug to its slowest in four months. The month saw disruptions from drought and power crunch in some cities as well as higher COVID infections and resultant increase in movement curbs.”

“In USD-terms, exports rose 7.1% y/y in Jul (Bloomberg est: 13.0% y/y; Jul: 18.0% y/y) while imports barely grew as it came in at 0.3% y/y (Bloomberg est: 1.1% y/y; Jul: 2.3% y/y).”

“Export growth is likely to continue on a moderating trend for the rest of the year due to the high comparison base and weakening external demand outlook while tightening COVID curbs ahead of the 20th Party Congress (16 Oct) could also increase disruptions to the businesses in the next two months.”

“In Jan-Aug, exports and imports were up 13.5% y/y and 4.6% y/y respectively. We maintain our forecast for a more moderate growth of 10-12% for export and around 5% for import this year.”