Even Chinese factories cranking out new iPhone 7s couldn’t save the country’s exports from sputtering in August, when they fell almost 3% year over year when priced in U.S. dollars. Imports edged up slightly, rising by 1.5%.
But there was more positive news in today’s trade release than those figures indicate.
China devalued its currency overnight by 2% in August 2015, and when priced in the country’s cheapening yuan, the trade figures look a lot better. In yuan terms, August exports rose almost 6% and imports jumped 11%, after contracting for 21 consecutive months. Both export and import data also blew past analyst expectations.
It’s becoming clear that the cheaper yuan has helped exporters sell more of their stuff abroad, where Chinese goods have become less expensive when priced in local currencies. Still, this currency effect has been dampened by slow growth across developed countries. “The fundamental issues that weigh on trade, in terms of poor business investment and global growth, will likely continue be a drag on external demand,” HSBC economists Julia Wang and Jing Li wrote today in Hong Kong.
In terms of import data, one of the most positive takeaways is that import volumes rose.
In previous months, the slight improvement in imports—used to support the story of China’s recovering domestic economy—came from a rise in the the value of imports, not from growing volume. Oil and other commodity prices have risen this year, forcing China to spend more money to import the same amounts.
But in August, a sharp rise in import volumes supports the the idea that a brighter outlook for China’s economy and consumers might be for real. That outlook has shown up in recent surveys of industrial and consumer economies.