The world’s second-largest economy continues to recover as can be seen from data released by China’s General Administration of Customs. Importantly, China’s dollar-denominated exports surpassed expectations to rise 9.5% for the month of August compared to the same period of time in 2019.
However, last month China’s dollar-denominated imports fell 2.1% from a year ago. It is worth mentioning that, economists expected exports to increase by 7.1% in August compared to the same period last year. As a reminder, dollar-denominated exports grew by 7.2% in July.
Interestingly, they also expected imports to grow by 0.1% in August from a year ago. In July, imports declined by 1.4%.
It is worth noting that, China posted a trade surplus of $58.93 billion for the month of August. This result surpassed expectations by more than $8 billion. In July, China’s trade surplus was $62.33 billion. Importantly, the growth in exports was the fastest pace in one-and-a-half years.
Despite the fact that the overall picture for the country’s trade improved, the outlook is not without turbulence. Notably, imports data pointed to weak domestic consumption.
Importantly, the strong export numbers over three consecutive months would boost Chinese growth in the second half of the year. Even though import numbers for August were disappointing, the demand for commodities was very strong. Nevertheless, imports of machinery were weak.
China and various factors
Interestingly, the demand for personal protective equipment as well as work-from-home items like computers helped to boost the export. However, the situation is unlikely to continue in the future. For example, European or American households are not going to continue to buy these types of goods for the foreseeable future. It makes sense, as they do not need another laptop, etc.
There are other challenges as well. For example, the upcoming U.S. presidential election in November. Moreover, tensions between the largest economies in the world are far from being over. The coronavirus pandemic once more highlighted the severity of the problems. Importantly, the U.S.-China disputes include a range of issues from trade to technology.
Tensions between the countries started a long time ago. Donald Trump used to criticize U.S.-China relations even before he became the president of the country. There are numerous topics such as intellectual property rights, forced technology transfers, etc. Moreover, even phase one trade deal won’t solve all the problems.
Thus, it too early to say that a trade war between the U.S. and China is over. Also, it is hard to determine how long it would take deal with all topics. Furthermore, it won’t be easy to forget all disagreements and to reach a comprehensive deal.
Interestingly, China’s trade surplus with the U.S. widened to $34.24 billion in August. In July this number was $32.46 billion.
People should remember that China has the second-largest economy in the world. This fact underlines the importance of the local economy. However, even for China, it will be hard to solve all problems without other countries.
Countries around the world should work together to boost the global economy.
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