China On Tenterhooks As Global Demand Softens

Is China finally suffering the aftermaths of overproducing? China’s exports are likely to have risen at the slowest pace in five months in September.

Source: Reuters

China manufacturers are not rushing out orders ahead of tariffs from several trade partners and that global demand for Chinese goods is declining. Trade data on dated 7 October is expected to show outbound shipments grew 6.0% year-on-year by value, according to the median forecast of 20 economists in a Reuters poll, down from the 8.7% pace recorded in August.

Inbound shipments are forecast to have increased by 0.9% last month, up from the 0.5% rise recorded in August, which would encourage Chinese policymakers wrestling to revive domestic demand.

Over Reliance On Global Demand

China’s exports grew at their fastest pace in nearly 1-1/2 years in August, but economists cautioned that officials in the world’s second-largest economy should avoid becoming too reliant on global demand as they work to bolster overall growth. Chinese officials on 8 October 2024 said they were “fully confident” of achieving the government’s full-year growth target of around 5% but refrained from introducing strong fiscal steps, disappointing investors who had anticipated more policy support.

China’s finance ministry will detail plans to boost the economy at a highly anticipated news conference. Manufacturing activity shrank for a fifth straight month in September, with new export orders falling to their worst in 7 months. Analysts have attributed previous months’ strong export performance to factory owners slashing prices to find buyers.

The European Commission saw its motion to impose additional duties on electric vehicles built in China of up to 45% pass in a divided vote of EU member states, joining the U.S. and Canada in tightening trade measures against China. Meanwhile, South Korea’s exports to China, a leading indicator of its imports, moderated last month compared to August owing to strong demand for semiconductors.

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