THE LATEST MONTHLY trade figures are a bit of a mixed bag when it comes to drawing broader lessons from them. As our chart above shows, the import and export numbers have different tales to tell.
China’s exports jumped a larger-than-expected 9.5% year-on-year in dollar terms in August, the third successive month of increase and the highest rise this year to date.
Given that most of Chinese exporters’ markets are still in Covid-19-induced recession, it is highly unlikely that global demand rose by anything like the same amount so that pace would be unsustainable until world trade normalises. Backlogs and suppressed demand are more likely the cause of the current uplift. Exports of medical supplies, including personal protective equipment, and electronics goods needed for working at home were also notably up.
China’s trade surplus with the United States rose to $34.2 billion in August, its highest level since November 2018, despite the US-China Phase One trade deal signed in January intended to reduce the surplus. The agreement calls for China to buy $200 billion of US goods and services in 2020-21 over and above 2017’s levels.
The Petersen Institute for International Economics tracker shows imports from the United States running well below the levels needed to be on track with the commitment. It counted, as of July, US exports to China of the products covered by the agreement worth $48.5 billion this year, compared with a prorated year-to-date target of $100.7 billion.
The 1.8% rise in US imports in August will not take much of a bite out of that gap. The target, however, is not annual but covers two years, so there is time for Beijing to catch-up — or perhaps change the terms of the deal with a new US administration, should November’s US presidential elections produce one.
Imports overall in August, fell by 2.1% in dollar terms, confirming earlier data that domestic demand remains weak. State-supported industry benefitting from stimulus measures is driving the recovery. That has yet to work through to retail consumption.