FX.co ★ China’s economy gets boost from exports

China’s economic recovery still surprises the global community. August data turned out to be impressive for both China and other countries. Local suppliers have increased exports, thus boosting the whole economy.

The Chinese economic growth could be primarily explained by a jump in global demand amid the recovery of other economies. In other words, the whole world is supporting the revival of the Chinese economy. According to China Customs Statistics, in August, exports advanced by 25.6% on a yearly basis and by 19.3% compared to the previous month. Even the most optimistic analysts had expected a jump of 17.1%. The strong exports data proves the stability of the country’s industrial sector. "While near-term headwinds remain, supply constraints in China have eased and we think the global economic recovery will continue to underpin China’s exports later this year and in 2022," Head of Asia Economics at Oxford Economics Louis Kuijs said.

At the beginning of the autumn, demand for Chinese goods is likely to remain high. What is more, retailers will start replenishing their inventories ahead of the Christmas and New Year shopping season. "The stretched global shipping capacity has left many boxes of finished goods piled up on Chinese factory floors, a factor set to bump up Chinese export numbers over coming months," Meng Xianglong, founder of Heji Trade & Credit Research Centre based in the port city of Ningbo, said.

China’s authorities may also contribute to the growth in exports by launching additional stimulus for economic expansion. Thus, the central bank is expected to deliver a further cut to the amount of cash banks must hold as reserves later this year. The regulator may take such measures even despite July's cut that released around 1 trillion yuan ($154.69 billion) in long-term liquidity into the economy.