3 months ago • 2 mins
What’s going on here?
Data out on Thursday showed that China’s exports dropped again in August.
What does this mean?
China’s trade data might not seem like something worth shouting about: after all, the nation’s still navigating rough waters, with exports declining for the fourth straight month. But delve a little deeper, and things brighten up. The 8.8% drop in exports year-on-year in dollar terms wasn’t as dire as economists expected, especially when compared to July’s steep 14.5% fall. And there’s more good news. Other Asian nations, like South Korea, are also showing signs of recovery in their trade. That trend suggests that global demand might be on the upswing, and that the massive inventory stockpiles accumulated during the pandemic are finally dwindling. Plus, better-than-anticipated import figures hint at a potential turnaround in China’s lagging domestic demand – so while it’s still early days, these indicators hold out hope for a big part of the Chinese economy.
Why should I care?
Zooming in: Trading insults.
While trade with the US seemed to perk up last month, the underlying tensions with China remain palpable. And even though both nations have tried to rekindle dialogue, real-world progress seems elusive. So, in the latest counter to US-led chip controls, China is mulling expanding a ban on iPhones in state companies and government-backed agencies. That could severely dent Apple’s prospects – especially when you consider that a fifth of its revenue springs from China, the world’s biggest smartphone market. Unsurprisingly, then, Apple shares wobbled when the news broke.
The bigger picture: Stuck in second.
While there’s optimism that fresh steps by the government might help China rebound soon, it’s not all rosy. Some economists warn that China’s current dip could delay its quest to outpace the US economy. In fact, Bloomberg Economics predicts that China might only edge ahead by the mid-2040s – and even then, that lead could be short-lived.
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