Significant Decline in China’s Exports to the U.S. Amid Sustained Trade Tensions

Recent customs data reveals that China’s exports to the United States plunged by 35% in May compared to the same month last year. This alarming statistic underscores the mounting pressure on the world’s second-largest economy, coinciding with a fresh round of trade negotiations set to commence later Monday in London.

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In contrast to the downturn in exports to the U.S., China’s total exports experienced a modest increase of 4.8% last month, down from an 8.1% year-on-year rise in April. However, imports saw a decline of 3.4% year-on-year, culminating in a robust trade surplus of $103.2 billion.

May data indicated that China shipped $28.8 billion worth of goods to the United States, down from $44 billion a year prior. Conversely, imports from the U.S. also dipped to $10.8 billion, according to the report.

Despite the challenges in the U.S. market, exports to Southeast Asia and the European Union remained strong, growing by 14.8% and 12% year-on-year, respectively. Notably, exports to Thailand, Vietnam, and Indonesia saw substantial gains, while shipments to Germany surged by over 12%.

“The acceleration of exports to other economies has helped China’s exports remain relatively buoyant in the face of the trade war,” commented Lynne Song from ING Economics.

Earlier in the year, many businesses rushed to place orders to circumvent potential tariff hikes. However, as new import duties took effect, shipments have since decelerated. Forecasts suggest a potential rebound in June, attributed to a temporary 90-day suspension of tariffs imposed by both China and the U.S. during their escalating trade dispute, as noted by Zichun Huang from Capital Economics.

“However, with elevated tariffs likely to persist and Chinese manufacturers facing broader constraints, we anticipate a further slowdown in export growth by year-end,” Huang added.

Despite this tentative tariff truce, tensions between Beijing and Washington continue unabated, marked by contentious exchanges over advanced semiconductors, critical “rare earth” minerals, and visa policies for Chinese students attending American universities.

The ongoing negotiations set to unfold in London follow a recent phone call between President Trump and Chinese leader Xi Jinping.

Trump mentioned that Xi had reportedly agreed to resume exports of rare earth minerals and magnets to the U.S., which had been reduced by China, posing a risk to various U.S. manufacturers reliant on these essential materials. However, there was no immediate confirmation from Chinese officials.

Data released Monday illustrated a nearly 21% decrease in the value of China’s rare earth exports from January to May compared to the previous year, despite a 2.3% increase in volume.

Similar patterns are observable in other products and commodities, including shoes, ceramics, and cell phones, as diminishing demand leads to plummeting prices.

Additional data released on Monday further highlighted the economic strain on China resulting from faltering exports. Imports have also waned, as manufacturers increasingly depend on foreign components and materials for the goods they produce for global markets.

Meanwhile, domestic demand in China is showing signs of weakness. The government reported a 0.1% decline in consumer prices for May, signaling sluggish consumer demand. Economists attribute this persistent deflation partly to lower food prices.

The situation is exacerbated by a 3.3% contraction in producer prices in May, the sharpest decline in nearly two years, following a 2.7% decrease in April.

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AP researcher Yu Bing in Beijing contributed to this report.