The FINANCIAL — Chinese exports fell in August for the second consecutive month as the world’s second-largest economy continued its struggle to regain momentum, according to Nasdaq.
China’s exports fell 5.5% in August from a year earlier in dollar terms, after a drop of 8.3% in July, data from the General Administration of Customs showed on September 8. Customs said in a statement that China’s exports will continue to face “relatively big pressure” in the fourth quarter.
Imports in August fell 13.8% in dollar terms from a year earlier, compared with a 8.1% decrease in July, fueling another significant trade gap, Customs said. China’s trade surplus widened in August to $60.2 billion from $43.03 billion in July.
The weak trade data mark the latest soft readout from the Chinese economy. Indicators of industrial production, factory activity and others point to slowing growth in the second half of the year, raising questions about China’s ability to meet its annual growth target of about 7% and denting investor confidence world-wide.
Beijing last month devalued its currency in a surprise move that experts said was aimed at helping its struggling exporters. Lower currency values can help exports by reducing the price that buyers pay in foreign markets. So far, the devaluation has done little to help increase the nation’s outbound trade, economists say, though they add it could take two to three months to have an impact.
Larissa Braun, a spokeswoman at Volkswagen (China) Investment Co., said the devaluation of the yuan has had a minor impact for the Volkswagen Group. “We have a very high localization ratio which makes us rather independent” from short-term devaluation pressures, she said. The company also operates regional and group currency hedging centers that offer additional protection, Ms. Braun added.
In a statement over the weekend after a G-20 finance ministers meeting in Turkey, Chinese Finance Minister Lou Jiwei said “there is no basis for long-term depreciation” of the Chinese currency.
China said Monday that its foreign exchange reserves fell by a record $93.9 billion in August from July, the largest- ever decline in dollar terms, as the central bank intervened in an effort to prop up the yuan after the devaluation. Capital Economics estimates that about $130 billion worth of funds were transferred out of China in August compared with its estimate of $75 billion in outflows in July.
Economic growth in China has remained weak despite five interest rate cuts and several reductions in required bank reserves since November.
In further signs of a slowdown, China on Monday cut its 2014 growth rate to 7.3% from 7.4% due to a weaker contribution from the service sector than originally reported, suggesting that Beijing’s effort last year to meet its official growth target of about 7.5% was more difficult than it appeared.
In a bid to bring some stability to China’s volatile stock markets and improve confidence in the government’s economic management, Mr. Lou, China’s finance minister, also said in the statement that economic growth would remain around 7% for the next four to five years and the stock market correction was nearly finished.
Discussion about this post