China’s imports tumbled in August, raising concerns about the health of the world’s second-largest economy and its contribution to global growth.
The data will add to the pressure on Beijing policy makers trying to ensure China’s economy avoids a hard landing, though authorities will take some comfort that their efforts to steady the country’s stock markets were rewarded with a late rally yesterday.
Imports dived 13.8% from a year earlier, far more than analysts had forecast, and a tenth consecutive monthly drop, reflecting both lower global commodity prices and sluggish demand.
A surprise devaluation in the yuan early last month combined with slowing consumer demand will dent the prospects of imports picking up significantly anytime soon.
Much of China’s imports are commodities and other raw materials going into factories that turn them into goods for sale overseas, so the fall could be an ominous sign for exports in the coming months.
Exports fell less than forecast, sliding 5.5%, but analysts were still doubtful that China can now achieve its year-end trade growth target of 6%.
China’s foreign exchange reserves posted their biggest ever monthly fall in August, reflecting Beijing’s efforts to stabilise the yuan following its devaluation.
The People’s Bank of China (PBOC), the central bank, said its intervention in the forex market was one of the reasons for the drop in foreign exchange reserves, adding that any future fluctuations in reserves would be “normal”.
The bank said in a statement late yesterday that China’s economy could maintain medium to high-speed growth in the long term, and the current account would remain in surplus, also over the long term.
Stocks have fallen around 40% since mid-June, with the Shanghai Composite Index hovering around the 3,000 point level, having been above 5,000 less than three months ago.
Shares initially declined yesterday but rallied later in the day to finish almost 3% higher — though trading volumes in both stocks and futures were down sharply.
The CSI300 index of the biggest stocks listed in Shanghai and Shenzhen closed up over 2.5%, while Shanghai was up almost 3%.
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