China: Trade outlook remains mixed – UOB

Economist at UOB Group Ho Woei Chen, CFA, gives her opinion on the Chinese trade outlook.

Key Quotes

“China’s exports expanded at a stronger-than-expected pace in August but the contraction in imports weighed on the outlook. In USD-terms, exports rose at 9.5% y/y… However, the contraction in imports worsened to -2.1% y/y… Imports have resumed contractions after a brief rebound in June, casting a pall on the domestic demand outlook… In August, China’s trade surplus narrowed to US$58.93 billion from US$62.33 billion in July.”

“And although China’s overall trade surplus rose to US$289.06 billion YTD (compared to US$255.26 billion in the same period of 2019), its trade surplus with the US had narrowed to US$187.57 billion, from US$195.30 billion in the same period of 2019.”

“US-China tensions have increasingly shifted into the technology space with US Trump administration’s crackdown on Chinese technology companies. This could dampen bilateral trade even as China may try to ramp up its agricultural purchases before year-end. The USChina tensions, weaker recovery in domestic demand and threats of COVID-19 resurgence are key downside risks to the trade outlook. On the other hand, sustained recovery in global demand supported by reopening of businesses is expected to anchor exports while the CNY strength may boost import demand ahead.”