China's export growth sinks in August, imports shrink

China’s export growth weakened in August and imports shrank as high energy prices, inflation and anti-virus restrictions weighed on global and Chinese consumer demand.

Exports rose 7% over a year ago to $314.9 billion, barely one-third of July’s 18% expansion, customs data showed Wednesday. Imports contracted by 0.2% to $235.5 billion, compared with the previous month’s already weak 2.3% growth.

Demand for Chinese exports has softened as economic activity in Western markets slowed and the Federal Reserve and central banks in Europe and Asia raise interest rates to cool surging inflation. At home, repeated closures of cities to fight virus outbreaks has weighed on consumer spending.

“The slowdown in China’s export sector is adding to headwinds for the Chinese economy,” said Rajiv Biswas of S&P Global Market Intelligence in a report. Lack of import growth highlights “continued weakness of Chinese domestic demand.”

Growth in the world’s second-largest economy fell to 2.5% in the first half of 2022, less than half the ruling Communist Party’s 5.5% annual target, after Shanghai and other industrial centers were shut down to fight virus outbreaks.

Factories have reopened, but temporary closures in areas including the southern business center of Shenzhen and a dry summer that left reservoirs in China’s southwest unable to generate hydropower have weighed on activity.

The International Monetary Fund and private sector forecasters have trimmed their already low growth forecasts.