China Exports Growth Slows in Blow to Economy's Bright Spot

China’s export growth unexpectedly slowed in September, curbing a trade rebound that has been a bright spot for a weakening economy that policymakers are relying on manufacturing to power.

(Bloomberg) — China’s export growth unexpectedly slowed in September, curbing a trade rebound that has been a bright spot for a weakening economy that policymakers are relying on manufacturing to power.

Exports climbed just 2.4% in dollar terms from a year earlier to almost $304 billion, the lowest level since May, the customs administration said Monday. Shipments to key markets including Japan, South Korea and Taiwan all fell, while exports to the European Union and the US marked their slowest rise in at least four months as politicians ramped up tariffs. 

Russian purchases of Chinese goods soared to a record $11 billion, as Beijing continues to shield Moscow from economic isolation after Western companies producing everything from cars to phones quit President Vladimir Putin’s nation due to sanctions to punish his military aggression.

“China’s export growth has been remarkably strong this year and helped to offset the weak domestic demand,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. “Looking ahead, it would be difficult to sustain strong export growth into next year, as trade tension heightens.”

Chinese exports have powered the economy this year with shipments through September soaring to the second highest value on record. Weak consumer spending at home, however, has dampened the appetite for foreign products spurring a record trade surplus, and prompting US President Joe Biden and others to impose trade curbs. 

Exemplifying that problem, imports inched up just 0.3%, leaving a trade surplus of almost $82 billion for September and $690 billion for the first nine months of this year. 

President Xi Jinping’s officials have unleashed a stimulus blitz of rate cuts, measures to support the property sector and promises of greater government borrowing in recent weeks in a bid to revive growth. That could lift demand for imports and help Beijing’s battle to boost inflation. A measure of economy-wide prices is currently stuck in its longest deflationary streak since 1999, which has pushed down export prices. 

China has relied on manufacturing and exports to propel growth as the property sector slump that’s wiped billions from household wealth has slammed consumer sentiment. That two-speed model held up while global demand remained relatively strong, but rising trade barriers could threaten its sustainability as countries from Canada to Brazil complain about a flood of cheap Chinese goods.

China’s battered steel industry, suffering from the property crash, is trying to export its way out of slumping demand, with export volumes at the highest since mid-2016, during the last housing crisis. 

The European Union voted earlier this month to impose tariffs as high as 45% on electric vehicles from China, accusing Beijing of unfairly subsidizing its industry and hurting local manufacturers.

Goldman Sachs Group Inc. upgraded its forecasts for China’s economic growth this and next year after Beijing signaled its intent to draw a line under its growth slowdown. The bank, however, maintained its predictions for slower growth for 2026 and beyond, citing factors including a global push by countries and companies to reduce their reliance on China in their supply chains.

—With assistance from Tomoko Sato and Alan Wong.

(Updates throughout.)