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Export grows at fastest in 17 months, supports economy

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Imports fail to impress, underlines weak domestic demand

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Exports possibly bolstered by shippers rushing to avoid

tariffs

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Trade barriers could undercut China's broad efforts to

lift

growth

By Joe Cash

BEIJING, Sept 10 (Reuters) - China's exports grew at

their fastest pace in nearly 1-1/2 years in August, suggesting

manufacturers are rushing out orders ahead of tariffs expected

from a growing number of trade partners, while imports missed

forecasts amid weak domestic demand.

The mixed trade data highlights the challenge facing Beijing

as policymakers try to bolster overall growth without becoming

too reliant on exports especially given the tightening of

consumers' purse strings.

China's economy has failed to fire over the past year amid a

prolonged property sector downturn, and a survey last week

showed exports in the doldrums and factory gate prices at their

worst in 14 months, pointing to producers slashing prices to

find buyers.

Outbound shipments from the world's second-largest economy

grew 8.7% year-on-year in value last month, the quickest since

March 2023, customs data showed on Tuesday, beating a forecast

6.5% increase in a Reuters poll of economists and a 7% rise in

July.

But imports increased by just 0.5%, missing expectations for

a 2% boost and down from the 7.2% growth a month prior.

"The strong export performance and trade surplus is

favourable to economic growth in the third quarter and whole

year," said Zhou Maohua, a macroeconomic researcher at China

Everbright Bank.

"However, the global economic and geopolitical environment

is complicated and China's exports face a lot of headwinds," he

added.

Economists have warned that Beijing risks undershooting its

growth target if it becomes too reliant on exports, following a

series of recent lacklustre data, raising pressure on

policymakers for more stimulus to revive China's economy.

TRADE BARRIERS

Moreover, mounting trade barriers are emerging as another

significant obstacle, threatening China's price-driven export

momentum.

China's trade surplus with the United States widened to

$33.81 billion in August from $30.84 billion in July. Washington

has repeatedly highlighted the surplus as evidence of the

one-sided trade favouring the Chinese economy.

Brussels' trade policy has turned more protective too, and

Beijing's efforts to negotiate with the European Union to ease

tariffs on Chinese electric vehicles (EV) have made little

headway.

And Canada last month announced a 100% tariff on Chinese

EVs, along with a 25% tariff on Chinese steel and aluminium.

As China attempts to pivot and direct more exports to

Southeast Asia and South Asia, it is also facing push back

there.

India is planning to raise tariffs on Chinese steel,

Indonesia is eyeing heavy duties on textile imports, and

Malaysia opened anti-dumping investigations into plastic imports

from China and Indonesia.

Still, some analysts expect outbound shipments to ride out

the storm, given the relative inexpensiveness of China's yuan

and the relative ease with which exporters can re-route their

wares to avoid the tariffs.

"Outbound shipments are likely to remain strong in the

coming months. Admittedly, more barriers are being erected,"

said Zichun Huang, China Economist at Capital Economics.

"We doubt the tariffs announced so far will prevent real

effective exchange rate declines from fuelling further gains in

China's global export market share," she added.

SLOW IMPORTS

The lower-than-expected imports might not bode well for

exports in the coming months, as just under a third of China's

purchases are parts for re-export, particularly in the

electronics sector.

China's commodities purchases also pointed to a bleak

domestic picture, with the Asian giant's iron ore imports down

4.73% from a year earlier last month, as weak demand in the

country's construction sector pinched steelmakers.

Furthermore, while China bought in a record 12.14 million

metric tons of soybeans in August, there were ominous signs for

the production powerhouse's future export performance.

Analysts say the buying spree was motivated by traders taking

advantage of lower prices to stock up amid concerns trade

tensions with the U.S. could intensify if Donald Trump returns

to the White House next year.