By John W. Miller, Chief Economic Analyst - Trade Data Monitor - The business of China is strong. The country’s exports increased to $235.3 billion in August, up 9.5% compared to the same month a year ago.
Because China still reigns supreme as the world’s top maker and exporter of manufactured goods from car parts to computers, its trading performance is closely watched as business and government leaders try to figure out where the global economy is headed in the midst of the Covid-19 pandemic.
There are reasons for concern. Overall, from January to August, Chinese exports declined 2.3% year-on-year to $1.6 trillion, and imports fell 5.2% to $1.3 trillion. The International Monetary Fund has predicted a 4.9% decline in global gross domestic product.
But the latest figures, available in detail from Trade Data Monitor, suggest that a high-tech rebound anchored by consumer demand in Europe and the U.S. remains strong. In August, exports of mobile phones increased 23.3% to $9.9 billion. Shipments of high-tech products rose 12% to $67.1 billion. It’s not just consumer goods, either. Exports of integrated circuits increased 10.9% to $10.3 billion.
This high-tech surge doesn’t just help China. Over the last 20 years, Big Tech has built global supply chains that range from San Francisco to Shenzhen. As long as this trend continues, it’ll help software designers, graphic designers and factory workers across the world.
The question is how long this can last if the pandemic hits a rough second wave and markets become saturated. You can only own so many iPhones.
China’s export data continues to show how much Covid-19 has affected lifestyles. With people being discouraged from going places, exports of shoes fell 17.8% to $3.4 billion.
The medical response to the pandemic has relied on gear made in China. Exports of textiles and fabrics including the protective medical masks everybody is wearing increased 48.5% to $14.7 billion.
One reason some analysts are worried about how long China’s current export surge can last is its imports, which declined 2.1% in August to $176.3 billion.
As the first country to go through a coronavirus wave, China is also a barometer for how its consumers are reacting to going back to normal. And, by some measures, its economy is performing just fine. Imports of high-tech products increased 4.9% to $58.9 billion.
But China’s imports include large quantities of raw materials and parts used to manufacture consumer goods, so they are an indication of wider medium and long-term business confidence.
Imports of copper ores and concentrates, used to make wires and other key components in electronic and electromechanical goods, declined 12.6% to 1.6 million tons. Shipments of auto parts into the country also fell.
To be sure, part of the decline in headline dollar value is being driven by falling commodity prices. Crude petroleum imports, for example, fell 25.2% to $14.9 billion, but increased 12.6% by mass to 47.5 million tons. But that’s also telling about the rest of the global economy: Prices are down because there’s less demand.
Import data suggests China’s agricultural sector is strong and that consumers may be stockpiling key foods. Fertilizer imports increased 42% to 925.6 thousand tons. Meat imports rose 52.2% to $2.3 billion, while shipments to China of cereals, legumes, tubers, sago and soybeans rose 8.8% to $4.5 billion.
If anything, the pandemic seems to be accentuating China’s trade surplus with countries around the world. In August, that surplus was $58.9 billion, up 69.7% from $34.7 billion in August 2019. Exports to the U.S. increased 19.8% to $44.8 billion, while imports rose only 1.3% to $10.5 billion.
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