China sees an unexpected growth in trade
The improvement in exports has increased China’s trade surplus with the US to $37.7bn
China has reported an unexpected import and export growth for the month of August, shrugging off anxiety surrounding COVID-19’s Delta variant.
Ahead of Tuesday’s figures, analysts had expected growth to slacken as a result of the coronavirus strain, which had already hampered retail sales and industrial production in July.
The largest outbreak of the new variant of the virus in China this year occurred in the city of Nanjing before spreading to several other cities. Although detected cases only ever numbered in the hundreds, Chinese authorities reintroduced a number of stringent restrictions to combat the spread of the virus.
Travel between certain cities was limited, quarantine quarters were re-established and several local officials were forced to step down for not taking the re-emergence of the virus seriously enough.
Notably, the port of Ningbo-Zhoushan, one of the busiest ports in the world, was partly closed after a worker tested positive for the virus.
Such restrictions, coupled with the onset of the Delta variant in some areas of the United States and a rise in global shipping costs, prompted experts to anticipate year-on-year export and import growth to fall from the month before to around 17% and 27% respectively.
Instead, China reported exports of $294.3bn in August, a 25.6% year-on-year increase and 6.7% above July’s figure. Imports rose by 33.1% to $236bn, 4.4% above last month’s reading.
China’s trade surplus
The nation’s trade surplus rose by $1.76bn on the month before to $58.34bn, but it was down 1% year-on-year.
China’s closely-monitored trade surplus with the US widened by 10% to $37.7bn. Exports to the US grew 1.9% faster than in July at 15.5% year-on-year to $51.7bn, while imports of US goods rose by a third to $14bn. Such growth occurred despite Washington and Beijing continuing to be at loggerheads over tariffs.
Following the data, the Shanghai Composite Index rose by 1.5% to a seven-month high, while the Hang Seng Index closed 0.7% higher.
Elsewhere in Asia, while the Bombay Sensex traded flat, the Nikkei 225 stood 0.8% higher, having briefly passed 30,000 for the first time since April.
US-China tensions continue
Many investors, both domestic and international, will hope for a consistent bull run now that the Chinese economy appears to have shrugged off the Delta variant. However, in the wake of the Donald Trump trade wars and the COVID-19 crisis, criticism of China has hardened among voices who were previously accommodative.
Writing in the Wall Street Journal, investor and political donor George Soros criticised the US investment firm BlackRock for stepping up its investment in China, stating: “Pouring billions of dollars into China now is a tragic mistake. It is likely to lose money for BlackRock’s clients and, more important, will damage the national security interests of the US and other democracies.”
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