Foreign trade growth belies doubters
According to statistics released on Monday by the General Administration of Customs, China’s exports surged by 11.6 percent year-on-year in August, the fifth consecutive month of positive growth this year, a sign of the welcome improvement in the state of both the Chinese and global economies.
In the first eight months combined, China’s foreign trade volume totaled 20.05 trillion yuan ($2.94 trillion). Although it was still down 0.6 percent year-on-year, the drop had narrowed by 1.1 percentage points compared with the decline from January to July, indicating the overall trade situation has taken a turn for the better.
China’s positive trade performance in August is mainly attributable to the easing of the lockdowns that have been in place in other major economies due to the novel coronavirus, which has led to their economies gradually recovering. This is testimony to how intertwined economies now are and how each has a bearing on others. While the recovery of its trade partners is contributing to China’s improving foreign trade, China’s strengthening economy in return is contributing to growth of the world economy.
From the supply side, China’s strong trade figures in August show that the country’s growth momentum remains strong. Official data show that despite the pandemic, the economy has been resilient and managed to grow steadily this year; it began stepping out of negative growth territory in the second quarter of this year, when China managed to get a firm grip on the virus.
With almost all indicators, including investment, retail sales, and industrial corporate earnings, being upbeat in July and last month’s trade data showing significant improvement, the recovery trend of the world’s second-largest economy has evidently been sustained. That the Chinese economy remains on a firm footing constitutes good news for the world economy, which sorely needs a boost from its largest growth contributor.
But the key to whether that boost can be maintained continues to hinge on the global pandemic situation. If it continues to worsen, the recovery in other countries may come to an end, which will in turn affect China’s trade.
Nevertheless, considering many countries are still struggling with the virus, global economic growth remains sluggish, market demand continues to be weak, and international trade risks continue to increase — not least because of the flare up in trade frictions ahead of the presidential election in the United States — China’s strong trade performance demonstrates how the talk of decoupling is just that — talk.
With the upgrading of its trade structure continuing, with its transition to high value-added trade such as high-tech and services, China is not only better able to withstand shocks but also becoming more coupled rather than less.