China's currency falls to 16-year low after falling exports

An uncertain economic outlook poses a threat to the Chinese leader's power. Photo: Gianluigi Guercia/Pool/REUTERS

The Chinese currency fell. to a 16-year low after exports fall for the fourth consecutive month, raising concerns about the prospects for the world's second-largest economy.

The yuan fell to its lowest level against the dollar since 2007 after the official figures showed that exports fell 8.8% in August from a year earlier.

These concerns point to growing economic problems for Beijing as the long-awaited recovery from the end of its zero-Covid policy never materialized. , increasing pressure on President Xi Jinping to step up stimulus.

The currency fell 0.1% to a low of 7.3259 yuan to the dollar.

Exports have historically been a key driver of growth manufacturing plant, but rampant global inflation has hurt foreign buyers' appetite for Chinese goods.

Although the decline in exports was less severe than traders feared and an improvement from the 14.5% drop in July, it failed to allay concerns about the Chinese economy.

This comes as the Chinese sector real estate is in decline as households shun projects from major developers trying to complete new buildings.

Exports to Western countries dropped significantly in August, with US merchandise sales down 17%. a year earlier.

Meanwhile, despite the war in Ukraine, trade ties with the Kremlin have deepened and exports to Russia have risen by 63%.

Chinese car exports have soared as manufacturers ramped up production of electric vehicles. by 104% from January to August.

098 Beijing's declining trade

Weaker demand from Chinese consumers hit imports, which fell 7.3% from a year earlier.

< p>Some economists warn that declining confidence among Chinese households will have spillover effects on Western companies, which will see less foreign interest in their products.

For President Xi, the shaky economic outlook poses a risk to his grip on power, they say observers.

Enodo Economics, China Forecaster, A note to clients says the «economic turmoil» has «provided a pretext for growing opposition to Xi's policies from senior party leaders at home.»

«Total U.S. investment in China as well as U.S.-China trade continues to fall, dealing a big blow to Beijing's hopes for a recovery from Covid-19,» the consulting firm added.

Chinese authorities have so far avoided any major costly political interventions to stimulate the economy. instead, they favor more limited measures, such as easing restrictions on mortgages and lowering some interest rates.