Global impact | Trade, inflation data offers hope for China’s economy, but there is still a long way to go

In this week’s issue of the Global Impact newsletter, we look at the state of China’s economy

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A vendor waits for customers at a market in Shenyang, in northeastern China’s Liaoning province. Photo: AFP

Published: 2:00pm, 12 Aug 2024Updated: 9:25am, 19 Aug 2024

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China has, for quite some time, been struggling to find a way to boost domestic demand.

Exports will, it is expected, provide a pillar for China as they have in the past, but getting people inside the country to part with their hard-earned cash has long troubled officials in Beijing.

A much-touted trade-in scheme has not yet grabbed the imagination of consumers, as June’s retail sales fell to their weakest level since China exited the coronavirus pandemic.

But while it is too early to celebrate, July’s trade and inflation data could offer some hope that Beijing’s push to get people spending may have had some effect.

Firstly, analysts said the better-than-expected import growth last month suggested a silver lining in the form of an initial recovery in domestic demand, driven by the electric vehicle sector.

China’s exports, a major growth engine in the first half of the year, grew by 7 per cent in July from a year earlier to US$300.6 billion. But it was the reading for imports – considerably beating expectations and rising by 7.2 per cent from a year earlier, compared to the 2.3 per cent decrease reported in June – that could be an initial sign of a rally in domestic demand.

Analysts expect imports to continue to pick up in the coming months, with Beijing offering more support as domestic demand has been named as a top priority.

China’s consumer price growth also rose more than expected in July, rebounding to a five-month high.