CHINA's exports grew more slowly than expected in August and it imported fewer goods, triggering fresh fears that Australia's most important trading partner is struggling to control the speed of an economic slowdown.
Exports - a key growth engine in China - grew 2.7 per cent year-on-year last month, higher than in July but well below the double-digit growth rate it had managed over past decades.
Surprisingly, imports data was even worse than the depressing exports data, declining by 2.6 per cent last month.
''Imports of ordinary trade items, which account for almost 60 per cent of China's imports, dropped sharply by 13.6 per cent year-on-year in August,'' said Donna Kwok, HSBC's China economist.
A sharp 12.7 per cent decline in European demand for Chinese-made goods was partly responsible for the decline in export growth.
These weak trade figures have triggered fresh market expectations that the Chinese government will step in with both fiscal and monetary policies to boost the economy.
Ms Kwok said the government had ample fiscal room to boost spending in the second half of the year.
''China's government had pencilled in a fiscal deficit of 1.5 per cent of GDP in its 2012 budget. In the first half of this year, it recorded a fiscal surplus equal to about 2 per cent of GDP,'' she said, ''which suggests that in the second half of the year, they will go into deficit for about 2 to 3 per cent of GDP.''
Australia's second most important trading partner - Japan - also suffered a slump in exports amid the slowdown in demand from China and Europe.
The Japanese economy grew at only half the expected pace, at 0.7 per cent, in the past quarter.