CHINA’S export slump eased in August, adding to early signals the worst may be over for some parts of the world’s second-largest economy as it tries to regain momentum.

Overseas shipments fell 8.8 per cent in dollar terms from a year earlier while imports contracted 7.3 per cent, both better than estimates and significantly less severe than July’s downturn. The trade surplus was US$68 billion for the month.

“Improving China trade data is an early sign of growth stabilisation,” said Raymond Yeung, chief economist for greater China at Australia & New Zealand Banking Group.

Other data has suggested global demand is beginning to pick up as well, providing some hope for China’s trade in the coming months. Exports from South Korea – a bellwether for world trade – also declined at a more moderate pace in August than the previous month.

Exports had been a key source of growth for China during the pandemic, but muted global demand has weighed on shipments throughout the year and exacerbated the economic slowdown. While economists still expect China’s growth to match an official government target of around 5 per cent for the year, the ongoing property crisis and weak confidence remain drags.

China’s benchmark CSI 300 Index of stocks declined as much as 1 per cent as at 11.15 am local time. The Hang Seng China Enterprises Index also lost over 1 per cent. The offshore yuan retained a morning loss of 0.1 per cent at 7.3230 per dollar, hovering near a 10-month low. The yield on 10-year government bonds was little changed at 2.67 per cent.

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“The overall momentum remains lukewarm,” said Zhou Hao, chief economist at Guotai Junan International Holdings. “The figures still suggest the headwinds remain despite some marginal improvement.”

Zhou said the chance that trade has hit a bottom will hinge on several factors, including domestic demand and the impact of property sector easing measures.

Other recent data has given some reason for cautious optimism. While an official gauge of manufacturing activity shrank for a fifth consecutive month in August, services activity is slowing – a sign that consumer spending remains subdued.

China’s government has in recent weeks rolled out a slew of incremental measures to revive business confidence and help the ailing property market, a key source of economic strain.

Authorities have so far avoided any large-scale fiscal stimulus amid concerns over the high debt levels in the economy. Some economists project China will miss its growth target of about 5 per cent for this year, and Bloomberg Economics has said the nation’s gross domestic product may never overtake the US in the long term. BLOOMBERG