China saw its exports drop 8.8% and imports decrease 7.3% in August, compared to last year, according to Thursday's customs report. This adds more strain to China's big manufacturing businesses as demand slows both domestically and internationally. A recent survey by Reuters had predicted exports to fall 9.2% and imports by 9.0%.
China, the world's number two economy, might not hit its annual 5% growth goal. This is because the country faces challenges like a declining property market, less spending by consumers, and a drop in credit growth. Several experts have downgraded their growth predictions for the year.
To help boost growth, Beijing has made some changes recently, like easing borrowing rules for people to buy homes. However, some experts believe these changes will not be enough. They point out that job growth is slowing and it's unclear how much people expect to earn in the future.
What does this mean for me?
Chinese factory activity shrank for a fifth straight month in August, a purchasing managers’ index showed last week, weighed down by a lack of new export orders and imported parts. However, factory owners indicated producer prices had improved for the first time in seven months, in a nod to improving domestic demand.
South Korean shipments to China, a leading indicator of the latter’s imports, dropped just 20% last month, softening from a decrease of 27.5% a month earlier.
China posted a trade surplus of $68.36 billion in August, compared with a forecast $73.80 billion and a July figure of $80.6 billion.