China's exports weakened in August due to rising inflation, which has crippled overseas demand and new COVID curbs and heatwaves disrupted production, reviving downside risks for the economy.
Exports rose 7.1 per cent from a year earlier in the month, down from an 18.0 per cent gain in July, official customs data showed on Wednesday. The reading didn't meet analysts' expectations for a 12.8 per cent increase.
Outbound shipments outperformed other economic drivers in 2022 but now face growing challenges as external demand wanes.
China's slower growth is due to unflattering comparisons to strong exports last year, but also worsened by more COVID restrictions as infections spiked and heatwaves disrupted factory output in southwestern areas.
Eastern Yiwu imposed a three-day lock down in early August to contain a COVID outbreak, disrupting local shipments and delivery of Christmas goods during the peak season.
Customs data showed that imports were tepid and rose only 0.3 per cent in August, from 2.3 per cent in the month prior to, and well below a forecast for a 1.1 per cent rise.
The weak domestic demand, dampened by the worst heatwaves in decades, a property crisis and sluggish consumption, crippled imports.
Commodity prices fell at a slower pace in August.
This left a trade surplus of $79.39 billion, compared with a $101.26 billion surplus in July, which was a record for single month goods trade balance for any country in history.
Analysts at Goldman Sachs expect China to maintain its trade surplus over the next few years but warned key risks are geopolitical tensions and higher commodity prices over the medium-term.
The central bank said on Monday it would cut the amount of foreign exchange reserves financial institutions must hold in order to slow down the yuan's recent depreciation.