In a significant shift, China's exports have experienced a sharp slowdown, rising just 2.4% in dollar terms year-on-year in September 2024. This marks a notable decline from 8.7% growth recorded in August. The Chinese customs office reported that this slowdown adds to the growing concerns over how to revitalize economic growth in the world’s second-largest economy.

The disappointing export figures come as global demand weakens, which has serious implications for the country's trade dynamics. Economists had expected a more robust performance, forecasting exports would increase by around 6% and imports by approximately 0.9%. However, the reality of just 0.3% growth in imports signals slack demand within China, largely due to a prolonged slump in the property sector, a critical driver of various product sales.

China reported a trade surplus of $81.7 billion in September, down from $91 billion in August. This decline reflects the ongoing challenges in the global trade landscape, especially as the U.S. and Europe have recently raised tariffs on exports from China, including those of electric vehicles and other significant products. These tariffs contribute to a bleak outlook for China's trade, which has historically been an engine of growth.

Data released alongside the trade figures also indicated weakening inflation and declining wholesale prices for manufacturers, further emphasizing the economic challenges the nation faces. In response, Chinese policymakers have implemented several measures to stimulate the economy. Recently, they announced the frontloading of 200 billion yuan (approximately $28.2 billion) from next year’s budget to support spending and construction projects. Finance Minister Lan Foan reiterated the government’s commitment to consider additional measures to spur faster growth.

Despite these efforts, the stimulus provided so far has not matched the scale that economists argue is necessary to pull the economy out of its stagnation. As of September, China's exports have risen 4.3% year-on-year for the year to date, bolstered by a more than 20% increase in shipments of autos, according to ING Economics. However, the overall export growth is decelerating, raising concerns among economists.

The report from ING highlights that with this engine of growth stalling, other sectors of the economy, such as investment and consumption, will need to step up to meet the government's growth target of approximately 5% for the year. If the government follows through on its commitments to increase spending, it could lead to stronger imports of various goods, including industrial materials.

Despite the challenges, experts believe that shipments might remain robust in the near term, primarily due to gains in export competitiveness. However, they caution that increasing trade barriers may pose significant constraints in the future.

As China navigates through these economic challenges, the need for robust measures to stimulate growth becomes ever more pressing. The economy's reliance on exports has decreased over time, making it crucial for investment and consumption to fill the gap left by stalling export growth.

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