According to Reuters, China’s August trade lost momentum as inflation hit overseas and ongoing COVID measures and heat waves hurt domestic demand.
Both the country’s imports and exports attained a very limited increase with the slowest pace in four months.
The country’s exports only increased 7.1 % in August, significantly down from an 18 % rise in July. The figure is much below expectation of 12.8% growth for the month.
Zhou Hao, chief economist at Guotai Junan International, told Reuters, “It seems the export softness arrived in earlier than expected, as recent shipping data suggests that demand from the U.S. and EU has already slowed as shipping prices have been falling significantly.”
Experts from Reuters cited strict COVID-controlled lockdowns and disrupted factory output by heat waves also worsened the growth.
The disappointing data further weakened China’s yuan, losing 0.36% to 6.98 per dollar. But the weakening yuan does not help the country’s exports. China’s imports were also disappointing in August when it rose only 0.3%, down from 2.3% in July and much below the 1.1% increase expectation.
The country’s imports were hurt by weak consumption due to Covid restrictions and the ongoing property crisis.
Its major import goods such as crude oil, iron ore, and soybeans all dropped, caused by heat waves and Covid restrictions.
In response to the disappointing Chinese trade data, Asian stock market dropped to a two-year low on Wednesday.According to Reuters, Asia-Pacific shares outside Japan, MSCI’s broadest index, fell to the lowest since mid-2020, down 1.5%.