Chinese exports rose sharply again in August. Imports, on the other hand, are growing only slowly. German companies in particular are feeling the effects of this.
A glimmer of hope for China’s economic recovery: exports from the second largest economy grew more than expected in August. According to data from the Beijing Customs Authority, exports rose by 8.7 percent year-on-year to the equivalent of 309 billion US dollars (around 280 billion euros). This means that Chinese exports have increased for the fifth month in a row.
Imports increased by 0.5 percent. Analysts had previously expected exports to increase by 6.6 percent, while imports were expected to increase by 2.5 percent.
Imports from Germany continue to collapse
According to Chinese customs, there were particularly large deviations in trade with Germany in August. While China’s exports rose by 21.3 percent, Chinese imports from Germany fell by 17 percent. Since the beginning of the year, China’s exports to Germany have increased by 3 percent year-on-year, while imports have fallen by 12.4 percent.
“Weak domestic consumption in China and cautious investments in the private sector are putting pressure on demand for German goods, which is something that companies in Germany are feeling,” commented Maximilian Butek, Executive Board Member of the German Chamber of Commerce in East China.
More sales, falling prices
The trade figures for August show that Chinese companies are selling more goods abroad. However, according to data published by the Beijing Statistics Authority on Monday, they are having to accept ever lower prices overall. Producer prices fell again in August by 1.8 percent compared to the previous year.
Producer prices have been falling continuously for almost two years. While concerns about deflation are growing in China, other countries are alarmed by the flood of cheap exports. The EU and the USA have recently imposed high tariffs on electric cars made in China.
Beijing has been planning to restructure the economy for some time. In the hope of creating new growth drivers, the expansion of high-tech sectors such as renewable energies and electromobility is being promoted. However, the new industries are struggling with overcapacity.
Tough competition, little consumption
Many companies have emerged in the electric car industry, which are now facing tough competition in the domestic market. Profits are also difficult to make because consumption is weakening due to economic uncertainty.
The crisis is particularly severe in the real estate sector, which has long contributed strongly to Chinese growth but is now experiencing a massive slump.
Millions of unsold homes are empty and many companies in this bloated sector are insolvent. At the same time, the labor market is tight, with young people in particular having difficulty finding employment that matches their qualifications.
Source: Stern
