China: Solid August exports data, road ahead may be bumpy – BBVA

Recent economic data from China showed that exports rose 9.5% in August compared to a year ago, surpassing market expectations. Analysts at BBVA Research, point out that coronavirus-related product shipments continued to support export growth, which helped to maintain the growth momentum. Regarding imports, analysts warn it remained in negative territory.

Key Quotes: 

“The August export growth surprised the market to the upside, surging to 9.5% y/y from 7.2% y/y in the previous month, driven by Coronavirus-related product shipment coupled with overseas countries eased their COVID-19 lockdown measures.”

“Import growth further contracted to -2.1% y/y from last month's reading of -1.4%, mainly due to the price effect.”

“China's export to the US reached record high in August, partly due to the front-loading behavior of escalating China-US trade tensions.”

“Although the exports of medical equipment and devices help to boost the country's exports, it remains to be seen whether such external demands are temporary or not as countries are building up their own production chain.”

“Despite the solid export growth data, the road ahead may be still bumpy. Global recession still weighs on external demand.”