China’s export sector, long considered a pillar of strength for the world’s second-largest economy, is showing signs of weakness ahead of the upcoming U.S. presidential election. The latest data released on Monday revealed that China’s exports grew by only 2.4% year-on-year in September, falling short of market expectations and marking the slowest growth in five months.
Analysts had anticipated a 6% increase in exports for September, according to a Reuters poll of economists. This significant
underperformance has raised concerns about the stability of China’s economic recovery, which has already been struggling with poor consumer confidence, a property crisis, high youth unemployment, and deflationary pressures.
The slowdown in export growth was broad-based, affecting shipments to major trading partners. Exports to Japan and South Korea contracted compared to the previous year, while growth in shipments to the United States and European Union was minimal at 2.2% and 1.2%, respectively.
Lu Daliang, a spokesperson for China’s General Administration of Customs, attributed the export slowdown to adverse weather conditions, logistical disruptions, and a high base from the previous year. However, economists at Nomura noted that the magnitude of the decline was “clearly larger than expected.”
The timing of this export weakness is particularly concerning as it comes just weeks before the U.S. presidential election. Republican candidate Donald Trump has stated that he would impose tariffs of over 60% on Chinese imports if elected, potentially further straining the already tense trade relationship between the two economic giants.
China’s import data also disappointed, with growth of just 0.3% year-on-year in September, down from 0.5% in August. This lackluster performance in both exports and imports suggests that China may be losing a crucial buffer against domestic economic challenges.
In response to these economic headwinds, Beijing is expected to implement additional measures to stimulate growth. The Chinese government has set a growth target of around 5% for this year, but achieving this goal may prove challenging given the current economic landscape.
While authorities announced aggressive monetary stimulus in late September, many analysts believe these measures may not be sufficient to address China’s economic troubles. The finance ministry has hinted at further fiscal stimulus but has not yet disclosed specific details or amounts, leaving markets in anticipation.
Rory Green, chief China economist at GlobalData.TS Lombard, suggests that Beijing may be deliberately holding back on significant economic stimulus ahead of the U.S. election. This cautious approach could be a strategic move to preserve resources in case of a Trump victory and the potential implementation of higher tariffs on Chinese exports to the United States.
The possibility of a Trump win and subsequent tariff increases puts pressure on Chinese policymakers to carefully consider their stimulus options. Green notes that Beijing may need to drive growth more aggressively in 2025 if faced with new trade barriers from the United States.
As China navigates these complex economic and geopolitical challenges, the coming months will be crucial in determining the trajectory of its economic recovery. The export sector, once a reliable source of growth, now faces headwinds from weakening global demand and potential trade tensions. How Beijing responds to these challenges, particularly in the context of the U.S. election outcome, will likely shape China’s economic strategy in the near future.