- Liu Xuezhi, macro-economy analyst at Bank of Communications Co.
China's trade worsened in August, as both exports and imports dropped more than expected, fuelling further concerns over the health of the world's second biggest economy. Overseas shipments plunged 6.1% from a year earlier in yuan terms, following the 8.9% decline in July. In dollar terms, China's exports decreased 5.5% in the reported month, compared with the 8.3% decline in July. At the same time, imports in August plummeted 13.8% in dollar terms from a year earlier, compared with a 8.1% decrease in July. China's trade surplus widened in August to $60.2 billion from $43.03 billion in July.
The data indicates tepid demand around the world outside of the US and falling prices for inputs to China's factories and their shipments abroad. Beijing's latest efforts to boost growth have included the fifth rate cut since November and the People's Bank of China's unexpected decision to devalue the Yuan last month. Yet, indicators of industrial production, factory activity and others point to cooling growth in the second half of the year, questioning China's ability to meet its annual growth goal of about 7% and damping investor confidence worldwide. In further signs of a downturn, China cut its 2014 growth rate to 7.3% from 7.4% due to a weaker contribution from the nation's service sector than originally estimated.
© Dukascopy Bank SA