China’s export growth dropped - Nomura

Analysts at Nomura explained that China’s export growth in USD terms dropped to 9.8% y-o-y in August from 12.2% in July (Consensus: 10.0%; Nomura: 12.5%; Figure 1), while import growth slowed to 20.0% from 27.3% (Consensus: 17.7%; Nomura: 26.0%). 

Key Quotes:

"This slowdown in trade growth reflected the impact of rising trade protectionism and the lagged drag from RMB appreciation from mid-2017 to Q1 2018. Export growth has held up well over the first seven months of this year (12.6% y-o-y, versus 7.9% in 2017), but could tumble to lowsingle digits and even negative territory in coming months due to the escalating USChina trade tensions and worsening prospects in some emerging market economies."

"Falling export growth will exert increasingly stronger pressure on Beijing, which has been trying to stem the slump in domestic demand. Since value added exports still contribute around 10% of China’s GDP, the incoming exports slowdown suggests it might take longer for China’s growth to recover, despite Beijing’s policy shift towards easing."

"Yesterday, Beijing announced it would raise export tax rebate rates on 397 lines of products. We expect Beijing to roll out more easing measures in coming months. "