China’s imports in August miss estimates as exports pick up pace

China’s trade growth picked up in August, though imports missed expectations, a sign that domestic demand remains tepid as the world’s second-largest economy faces mounting pressure to rebalance trade.

Exports grew 25% in U.S. dollar terms in August from a year earlier, official customs data showed Tuesday, in line with Reuters-polled analysts’ forecast, quickening from 23.9% increase the previous month.

Imports rose 28.2% last month, missing economists’ estimates of 30% in a Reuters poll, but gathering momentum from 27.5% in July. As a result, China’s trade surplus swelled to $119.09 billion from $112.5 billion in July.

Exports have become the primary growth driver for China’s economy, as surging demand for high-tech components amid a global build-out of AI infrastructure has helped cushion the drag from geopolitical shocks, sluggish domestic demand and a slump in investment.

Policymakers set a target range of 4.5-5% for China’s gross domestic product growth this year, but momentum has sputtered after a solid start to the year, with growth slowing to a more than three-year low of 4.3% in the second quarter.

Data released last month showed domestic demand and investment weakened further in July, while manufacturing activity contracted for a second straight month.

Neo Wang, China strategist at Evercore ISI, expects growth to regain some momentum in the second half of this year, encouraged by the “sense of urgency and determination in Beijing’s recent policy communications,” as well as stabilizing manufacturing activity in August.

Fiscal spending by the government has accelerated in recent weeks, helping arrest the decline in investment and restore stability, Wang said. Chinese government plans to fund a $54 billion capital injection into several state-owned banks and insurers, as Beijing seeks to bolster growth with constrained stimulus.

The offshore yuan barely moved after the data release on Tuesday, standing at 6.7099 per U.S. dollar. The Chinese currency has outperformed its Asian peers this year, strengthening 3.8% year to date against the greenback.

The breakout performance in China’s exports has drawn scrutiny from Western trading partners, demanding that Beijing rebalance its trade and boost domestic demand.

Group of 20 finance ministers gathered in the U.S. earlier this month and issued a joint statement criticizing economies that rely heavily on exports, with China being the only dissenting member. Beijing pushed back on the trade complaints, calling them “an excuse to pressure and restrict China.”

People’s Bank of China Governor Pan Gongsheng said during a speech at the G20 summit that China has never actively pursued a trade surplus, nor has…