China’s exports surge to nearly two-year high, boosting economy against deflation

Chinese exports

Bloomberg reported that “China’s exports” unexpectedly rose in August to their highest level in nearly two years, providing a boost to the deflation-stricken economy.

China’s exports rose nearly 9% year-on-year to $309 billion, the highest level since September 2022 and far above estimates, while imports grew just 0.5%, leaving China with a trade surplus of $91 billion, according to China’s customs.

Not only that, but China’s exports are helping an economy struggling with a property slump and deflation. However, the outflow of cheap goods into global markets has sparked retaliatory tariffs in the US, South America and Europe.

In addition, China’s economic indicators for August so far showed the economy was struggling to recover after a rough start to the second half of the year, with manufacturing activity contracting for a fourth straight month, while core inflation fell to a more than three-year low.

While China’s continued expansion in exports is good for the economy, Chinese companies have had to cut prices to maintain sales, with shipment volumes rising faster than value over the past month. Chinese export data released Monday showed that prices for manufactured goods fell 2.7% in August from a year earlier.

The surge in cheap Chinese goods is making countries increasingly anxious. Some have already slapped tariffs on electric cars, steel and other goods. China’s steel exports rose to 9.5 million tons, a three-month high, despite pressure from tariffs from trading partners.

Source of data