China's export growth in August beats forecasts in yuan terms

[BEIJING] China's exports and imports grew faster than expected in yuan terms last month, showing both domestic and international demand continue to rise despite worsening relations with the US.

Exports rose 7.9 per cent in August in yuan terms, the customs administration said Saturday, faster than the forecast of 5.7 per cent. Imports climbed 18.8 per cent, leaving a trade surplus of 179.8 billion yuan (S$36.2 billion).

US pressure on China ramped up again Friday, with President Donald Trump now threatening to impose tariffs on an extra US$267 billion in Chinese goods, on top of duties on US$50 billion already in force and another US$200 billion in the works. Front-loading of exports and imports to get ahead of those earlier increases might explain part of the robust growth.

"We believe the US government will continue to escalate the scale and scope of trade and investment measures against China," Raymond Yeung, chief greater China economist for Australia & New Zealand Banking Group in Hong Kong, wrote in recent note.

"This policy direction is unlikely to change even after the US mid-term elections in November. Besides retaliation, China is expected to offset the negative economic effects of the trade measures through a more proactive fiscal policy."

Talks last month between mid-level officials led nowhere, and neither side has indicated a willingness to resume negotiations on ending the dispute.

Meanwhile, China's yuan has stabilised after months of losses. Mr Trump said late last month that China was devaluing the currency in an attempt to make up for lack of demand. A cheaper yuan would make China's exports less expensive and increase competitiveness in the international market.

BLOOMBERG