China's August exports seen keeping solid momentum; imports flat: Reuters poll

BEIJING (Reuters) - China’s exports likely posted a second month of solid gains in August as more of its trading partners relaxed coronavirus lockdowns and reopened their economies, while imports edged back into growth, a Reuters poll showed on Friday.

FILE PHOTO: A cargo ship carrying containers is seen near the Yantian port in Shenzhen, following the novel coronavirus disease (COVID-19) outbreak, Guangdong province, China May 17, 2020. REUTERS/Martin Pollard/File Photo

China’s export performance, boosted by record shipments of medical supplies and robust demand for electronic products, has not been as severely affected by the global slowdown as some analysts had feared, adding to hopes for a sustained economic recovery.

Exports in August are expected to have risen 7.1% from a year earlier, according to a median estimate of a Reuters poll of 23 economists, compared with a rise of 7.2% in July.

Imports likely rose 0.1% on year, the poll showed, still sluggish but improving after falling 1.4% the previous month.

A private survey on manufacturing activity showed Chinese factories reported the first increase in new export orders this year in August as overseas demand slowly revives. The pick-up in business also led to a further expansion in production, marking the sharpest gain in almost a decade.

Stronger exports could signal a faster and more balanced recovery for the Chinese economy, which is rebounding from a record first-quarter slump thanks largely to domestic stimulus measures.

July exports confounded analysts’ expectations by rising the most this year, while some raw material imports hit record highs.

“Exports are back in play to be the key driver for Asia’s biggest economy,” Prakash Sakpal, an economist at ING, said in a note this week.

However, external demand could suffer if virus control measures have to be re-imposed by trade partners later this year on a resurgence of the epidemic.

China also is looking to reduce its reliance on overseas markets for its development as U.S. hostility and the pandemic increase external risks that could hamper longer-term progress.

Already heightened U.S.-China tensions are expected to escalate ahead of the U.S. presidential election. China remains well behind on its pledge to boost purchases of U.S. goods under an agreement that was launched in February.

Top U.S. and Chinese trade officials reaffirmed their commitment to a Phase 1 trade deal in a phone call last week. “Both sides see progress and are committed to taking the steps necessary to ensure the success of the agreement,” the U.S. Trade Representative’s office said.

The U.S. Trade Representative’s Office said Tuesday it had extended tariff exclusions for a wide range of Chinese goods such as smartwatches and some medical masks but only through the end of 2020, a move that may create some leverage for Washington in trade negotiations but increases uncertainty for businesses.

Reporting by Gabriel Crossley; Editing by Kim Coghill