SHENZHEN, CHINA – MAY 1: The Chinese national flag is seen in front of stacked shipping containers bearing MSC (Mediterranean Shipping Company), Maersk, and Hamburg S\u00fcd branding at Yantian Port on May 1, 2026, in Shenzhen, Guangdong Province, China. <\/p>\n
Cheng Xin | Getty Images News | Getty Images<\/p>\n
China’s trade growth picked up in August, though imports missed expectations, a sign that domestic demand remains tepid as the world’s second-largest economy faces mounting pressure to rebalance trade.<\/p>\n
Exports grew 25% in U.S. dollar terms in August from a year earlier, official customs data showed Tuesday<\/a>, in line with Reuters-polled analysts’ forecast, quickening from 23.9% increase the previous month. <\/p>\n Imports rose 28.2% last month, missing economists’ estimates of 30% in a Reuters poll, but gathering momentum from 27.5% in July. As a result, China’s trade surplus swelled to $119.09 billion from $112.5 billion in July. <\/p>\n Chinese shipments to the U.S. surged 34.4% in August, extending the double-digit gains for most of this year, while imports grew 17.8%, according to CNBC’s calculation of official data. The exports to the European Union expanded 6.6% while imports ticked higher by 0.7% last month. China’s imports from South Korea more than doubled last month while exports jumped nearly 50%.<\/p>\n Exports have become the primary growth driver for China’s economy, as surging demand for high-tech components amid a global build-out of AI infrastructure has helped cushion the drag from geopolitical shocks, sluggish domestic demand and a slump in investment. <\/p>\n “China continues to rely on exporters to support the economy” as domestic demand remains subdued, said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, noting the mounting pushback from governments globally over its trade imbalances.<\/p>\n The offshore yuan barely moved after the data release on Tuesday, standing at 6.7099 per U.S. dollar. The Chinese currency has outperformed its Asian peers this year, strengthening 3.8% year to date against the greenback. <\/p>\n Calls for a stronger yuan<\/p>\n China’s exorbitant surplus has fueled calls among economists and foreign officials for Beijing to strengthen its deeply undervalued yuan, which has contributed to its export boom. Council on Foreign Relations senior fellow Brad Setser estimated last month that the Chinese currency is undervalued by 20%<\/a>.<\/p>\n The breakout performance in China’s exports has drawn scrutiny from Western trading partners, demanding that Beijing rebalance its trade and boost domestic demand. <\/p>\n Group of 20 finance ministers gathered in the U.S. earlier this month and issued a joint statement criticizing economies<\/a> that rely heavily on exports, with China being the only dissenting member. Beijing pushed back on the trade complaints<\/a>, calling them “an excuse to pressure and restrict China.” <\/p>\n People’s Bank of China Governor Pan Gongsheng said during a speech at the G20 summit that China has never actively pursued<\/a> a trade surplus, nor has it depreciated the currency to gain trade competitiveness. He added that the country’s market would remain open for foreign businesses. <\/p>\n Washington’s frustration over trade relations, however, is unlikely to derail the bilateral relationship ahead of a high-stakes visit<\/a> by Chinese leader Xi Jinping<\/a> to Washington D.C., scheduled later this month, Wang said, citing the U.S.’ s narrowing deficit with China and its mounting trade disputes with other trading partners. <\/p>\n Fiscal push<\/p>\n Neo Wang, China strategist at Evercore ISI, expects growth to regain some momentum in the second half of this year, encouraged by the “sense of urgency and determination in Beijing’s recent policy communications,” as well as stabilizing manufacturing activity in August. <\/p>\n Beijing set a target range of 4.5%-5% for China’s gross domestic product growth this year, but momentum has sputtered after a solid start to the year, with growth slowing to a more than three-year low of 4.3%<\/a> in the second quarter. <\/p>\n Data released last month showed domestic demand and investment weakened<\/a> further in July, while manufacturing activity contracted for a second straight month.<\/p>\n Fiscal spending by the government has accelerated in recent weeks, helping arrest the decline in investment and restore stability, Wang said. Chinese government plans to fund a $54 billion capital injection<\/a> into several state-owned banks and insurers, as Beijing seeks to bolster growth with constrained stimulus. <\/p>\n Economists see room for further monetary easing this year. Shan Guo, a partner at China-focused Hutong Research, expects one or two interest-rate cuts by year-end, with the pace tied to the Federal Reserve’s policy moves, the Ministry of Finance bond issuance, and the yuan’s pace of appreciation.<\/p>\n The more the yuan appreciates, the more room the PBOC has to cut interest rates, even if the Fed keeps hiking, Guo said.<\/p>\n \u2014 CNBC’s Evelyn Cheng contributed to this report. <\/p>\n