China’s export growth likely slowed in May amidst ongoing trade uncertainties. Despite a reduction in U.S. tariffs on Chinese goods, the impact of the unresolved trade conflict and fluctuations in Sino-U.S. relations weighed heavily on shipments. Economists’ forecasts indicate that outbound shipments may have risen by 5.0% year-on-year in value terms last month, a decline from April’s 8.1% increase.
In contrast, imports are projected to see a 0.9% drop compared to the previous year, widening from a 0.2% decline in April. The turbulence in the global trade landscape and the shifting dynamics of U.S.-China trade have created instability for Chinese exporters and their international partners. A recent phone call between U.S. President Donald Trump and Chinese President Xi Jinping helped to ease tensions, but important trade issues remain unresolved.
Key concerns include Beijing’s control over rare earth exports and Washington’s restrictions on chip-related exports, necessitating further discussions. Earlier in May, China and the U.S. agreed to a 90-day truce, reversing many of the increased tariffs that took effect in early April. While the reduction of U.S. tariffs was positively received by policymakers in China, the nation grapples with weak domestic demand and falling prices.
Economists’ opinions vary widely on how recent trade discussions will affect China’s exports, with predictions of growth ranging from 9.3% to a 2.5% decline. Analysts from Nomura suggested that the tariff truce could lead to a reduction in urgency for substantial stimulus measures from the Chinese government. They also cautioned that average U.S. tariffs on Chinese imports could remain significantly high, and expect a sharp deceleration in China’s export growth in the latter half of the year.
Recent factory activity data indicated further challenges, as manufacturing indexes showed contractions. In response, the central bank has made moves to lessen the economic impact of the trade war, including cutting benchmark lending rates. China’s trade surplus for May is estimated at $101.3 billion, an increase from April’s figure of $96.18 billion.