China’s export boom is becoming its Achilles heel

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China is rapidly approaching the point where its strengths become its weakness.

Data released this week shows its economy is growing strongly. GDP growth of 4.5 per cent in September and 4.6 per cent for the first nine months of the year are keeping it on track to meet Beijing’s target of between 4.5 per cent and 5 per cent growth this year. The figures were stronger than economists had predicted.

While that might appear to demonstrate Chinese exceptionalism in a global economy spluttering under the weight of debt, wars and trade wars, it also highlights the ever-growing imbalances within Asia’s biggest economy.

For the past five years – ever since President Xi Jinping implemented his “three red lines” policy that curbed property developer’s leverage and triggered a crash in the country’s property market that continues today -- China’s domestic economy has stagnated.

That has left China increasingly reliant on exports for growth - and that dependence has been steadily increasing.

In September, exports grew 36 per cent – their fastest pace in more than a decade and a half – and generated a trade surplus of $US938 billion ($1.34 trillion). The country is on track to beat last year’s record surplus of $US1.2 trillion.

With domestic demand weak – retail sales were up only 1.1 per cent in September compared with the same month last year, and have been near-stagnant since the start of the property market’s collapse – China has become increasingly dependent on exports to soak up the over-capacity that is now rife within its factories.

Donald Trump’s trade war has crimped exports to the US.