Exports grew by 9.5 per cent in August, but the drop in imports signals a contraction in domestic consumption. Xi's strategy to favour domestic demand over foreign exports is at risk. About 600 million Chinese earn US$ 146 a month. The country cannot absorb everything it produces.
Beijing (AsiaNews) – Chinese exports surged by 9.5 per cent in August, compared to the same month in 2019, Chinese customs reported.
This is a sign that the economy is picking up after the worse of the COVID-19 pandemic. However, a drop in imports (-2.1 per cent) indicates a contraction in domestic consumption.
Xi Jinping’s “dual circulation” plan to overcome the pandemic crisis thus does not appear to be working.
The Chinese president wants to reduce dependence on exports, i.e. on the purchasing power of foreign, especially Westerner, consumers.
The follows the pandemic that has disrupted the global supply chains, centred on China’s manufacturing sector, and the trade war with the United States, which threatens some of China’s strategic sectors.
According to the country’s National Bureau of Statistics, retail sales of goods shrank about 10 per cent in the first seven months of this year from a year earlier.
The real decline in consumer spending could be even deeper, as the retail sales figures include government spending at shops and restaurants.
Premier Li Keqiang said last month that 600 million of China’s 1.4 billion residents live on a monthly income of just 1,000 yuan (US$ 146).
For analysts, weak consumer spending is the result of the country's skewed wealth distribution, which favours the state and the rich instead of ordinary people, and of the way the economy is structured.
Teng Tai, the director of a Beijing-based private think tank studying supply-side reforms, was quoted recently by the official Securities Times as saying that it is impossible for China to rely solely on the domestic market to sustain its massive manufacturing apparatus.
For Teng, “There is a set of figures for reference: China makes 10 billion hats, 10 billion pairs of shoes, 30 billion pieces of clothing, and 200 million tablets and portable computers each year. It is not possible to sell them all in the domestic market.”