SHENZHEN, CHINA – MAY 1: A Chinese flag is raised in front of a stack of shipping containers bearing the brands of MSC (Mediterranean Shipping Company), Maersk and Hamburg Süd at Yantian Port in Shenzhen, Guangdong Province, China on May 1, 2026.
Chen Xin | Getty Images News | Getty Images
China’s trade picked up pace in August, but imports fell short of expectations, showing domestic demand remains weak as the world’s second-largest economy faces increasing pressure to rebalance its trade.
Official customs figures released on Tuesday showed exports rose 25% in US dollar terms from a year earlier, in line with analyst estimates compiled by Reuters and accelerating from a 23.9% rise in the previous month.
Imports rose 28.2% last month, short of the 30% expected by economists polled by Reuters, but up from 27.5% in July. As a result, China’s trade surplus expanded to $119.09 billion from $112.5 billion in July.
Exports have become the main growth driver for China’s economy, with demand for high-tech components surging as the world builds out AI infrastructure, helping to cushion the drag from geopolitical shocks, weak domestic demand and weak investment.
Policymakers have set a target range for China’s gross domestic product growth this year of 4.5% to 5%, but after a solid start to the year, momentum has been lost, with growth slowing to 4.3% in the second quarter, the lowest level in more than three years.
Domestic demand and investment weakened further in July, with manufacturing activity contracting for the second consecutive month, data released last month showed.
Neo Wang, China strategist at Evercore ISI, expects growth to regain some momentum in the second half of this year, driven by a stabilization in manufacturing activity in August as well as “a sense of urgency and determination in the Chinese government’s recent policy communications.”
Wang said government spending has accelerated in recent weeks, helping to stem the decline in investment and restore stability. The Chinese government aims to boost growth with restrained stimulus and plans to inject $54 billion in capital into several state-owned banks and insurance companies.
The offshore yuan was little moved after Tuesday’s data release, at 6.7099 to the dollar. China’s currency has outperformed Asian currencies this year, gaining 3.8% against the dollar since the beginning of the year.
China’s dramatic export performance has drawn scrutiny from Western trading partners, who are pushing Beijing to rebalance trade and boost domestic demand.
Finance ministers from 20 countries and regions (G20) gathered in the United States earlier this month and issued a joint statement criticizing economies that rely heavily on exports, with China being the only member opposed. Beijing has responded by calling the trade complaints “an excuse to put pressure on and restrict China.”
In his speech at the G20 summit, People’s Bank of China Governor Ban Gongsheng said that China has never actively pursued a trade surplus or sought to depreciate its currency to improve trade competitiveness. He added that the country’s market remains open to foreign companies.
But Wang said U.S. dissatisfaction with trade relations was unlikely to derail bilateral relations ahead of Chinese leader Xi Jinping’s high-stakes visit to Washington, D.C., scheduled for later this month, citing a narrowing U.S. deficit with China and escalating trade tensions with other trading partners.
Economists see room for further monetary easing this year. Xiang Guo, a partner at Hutong Research who specializes in China, expects one or two rate cuts by the end of the year, linked to Federal Reserve policy moves, Treasury bond issuance and the pace of the yuan’s appreciation.
Guo said the more the yuan appreciates, the more room there is for the central bank to cut rates, even if the Fed continues to raise rates.
