China’s exporting mechanism remains robust, albeit its modest slowdown in August, as manufacturers manage to circumvent the harsh tariffs imposed by the Trump administration and find clients across the rest of world.
Exports were only up by 4.4% in August, the latest report showed, missing the markets’ 5% expectation and recorded its slowest growth expansion in over 6 months. Import growth was also below estimates, with the pace easing from July’s high of 4.1% to the 1.3%, as domestic demand remains systemically soft.
Not only that, a persistently sluggish property sector, rising job insecurity and unemployment amongst young adults, alongside the tapering of consumer-focused stimulus practices kept domestic demand subdued.
Exporting activity towards ASEAN nations continues to the dominanttheme and destination of Chinese goods (22%), as outbound orders towards the US continue to plummet (almost -30%). Other popular destinations for Chinese goods, are Taiwan (17%), Australia (10%), Eurozone (10%) and Japan (7%).
As the relatively speaking, weak data set came in, calls for additional stimulus measures by the government started to echo in the market, a phenomenon observed multiple times over the past few years.
On the geopolitical front, the 90-day US-China tariff truce extension, agreed on the 11th of August, appears to be intact and respected by both parties. Import taxes for Chinese goods are now being slapped with a 30% levy, whereas US goods entering China will receive a 10% duty tax respectively.
Technical Analysis
USDCHN Chart – The Chinese Yuan gains ground against a beaten down greenback
Resistance: 7.2180 (R1), 7.2600 (R2), 7.3100 (R3)
Support: 7.1000 (S1), 7.0500 (S2), 7.000 (S3)
