China's exports to the United States fell 35 per cent in May from a year earlier, new customs data show, adding to pressure on the world's second largest economy as a new round of trade talks with Washington was due to start later Monday in London.
China's total exports rose 4.8 per cent last month, slowing from an 8.1 per cent year-on-year increase in April. Imports declined 3.4 per cent year-on-year, leaving a trade surplus of USD 103.2 billion.
China exported USD 28.8 billion to the United States in May, compared with USD 44 billion a year earlier. Its imports from the US fell to USD 10.8 billion, the report said.
Still, exports to Southeast Asia and the European Union remained robust, growing 14.8 per cent and 12 per cent, year-on-year.
Exports to Thailand, Vietnam and Indonesia were sharply higher, and exports to Germany jumped more than 12 per cent.
“The acceleration of exports to other economies has helped China's exports to remain relatively buoyant in the face of the trade war,” Lynne Song of ING Economics said in a commentary.
Many businesses had rushed orders earlier in the year to try to beat higher tariffs. Once new import duties took effect, shipments slowed. Exports will likely rebound somewhat in June thanks to a 90-day suspension of most of the tariffs China and the US imposed on each other in their escalating trade war, Zichun Huang of Capital Economics said in a report.
“But with tariffs likely to remain elevated and Chinese manufacturers facing broader constraints on their ability to sustain rapid gains in global market share, we think export growth will slow further by year-end,” Huang said.
Despite the tariffs truce, rancor between Beijing and Washington has persisted, with angry exchanges over advanced semiconductors, “rare earths” that are vital to many industries and visas for Chinese students at American universities.
The round of negotiations due to take place later Monday in London follow a phone call last week between Trump and Chinese leader Xi Jinping.
It's unclear if that exchange will lead to any significant progress during the talks this week.
Speaking to reporters on Air Force One on Friday, Trump said Xi had agreed to restart exports of rare earth minerals and magnets to the US which China had slowed, threatening a range of US manufacturers that relied on the critical materials.
There was no immediate confirmation from China. The trade data released on Monday showed a nearly 21 per cent plunge in the value of China's rare earths exports in January to May compared with a year earlier. In terms of volume, those exports rose 2.3 per cent.
Similar trends can be seen in exports of other products and commodities, such as shoes, ceramics and cell phones, as slowing demand causes prices to fall.
Other data released Monday highlighted the pressure on China's own economy from slowing exports. Imports have faltered since manufacturers import many of the components and materials needed for the goods they assemble for the world.
At the same time, China's own domestic markets are suffering. The government reported that consumer prices fell 0.1 per cent in May, evidence of sluggish demand. The persisting deflation partly reflects lower food prices, economists said.
Producer price deflation was worse, contracting 3.3 per cent in May, its lowest level in almost two years, after falling 2.7 per cent in April.
