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Luna Sun

China’s export growth slowed last month, weighed down by fewer US orders being made before the two countries came to a 90-day tariff truce.
And while June’s prospects look poised to improve, China’s manufacturing and trade sectors remain under strain, according to economists, who also point to lingering uncertainties over American tariffs.
China’s May exports were up by 4.8 per cent, year on year, to US$316.1 billion, customs data showed on Monday.
The figure followed April’s 8.1 per cent growth and fell short of the estimate of a 6.28 per cent increase in a market survey by Chinese financial data provider Wind.
Exports to the United States plunged by 34.52 per cent, sharper than the 21 per cent drop seen in April, owing to the trade war between the two countries.
On May 12, China and the United States agreed to a temporary truce in their tit-for-tat tariff escalations, jointly announcing the removal of most tariffs imposed since April 2.
As the reduced tariffs and new orders would take time to feed through to actual shipments, “June will be a better month for China’s exports as June will be the first full month for Chinese exporters to enjoy reduced US tariffs, and there’s a chance of US tariffs going further down”, said Xu Tianchen, senior China economist with the Economist Intelligence Unit.
Export growth was also likely stalled by heavy customs inspections in May due to China’s tightened export controls, he added.
Shipments to members of the Association of Southeast Asian Nations – China’s largest trading partner and a key transshipment hub – rose by 14.84 per cent in May.
Imports, meanwhile, fell by 3.4 per cent, year on year, compared with a 0.2 per cent downtick in April. Wind predicted a 0.7 per cent increase.
China’s trade surplus stood at US$103.2 billion in May, up from US$96.18 billion in April.
The front-loading of exports is still ongoing … but it may fade away some time in the second half of the year
Zhang Zhiwei, Pinpoint Asset Management
While the US-China agreement to cut tariffs provided some breathing room, analysts have warned that a lasting recovery will depend on whether the truce holds beyond the 90-day window.
Later on Monday, China and the US were set to have ministerial-level talks in London – the latest attempt to defuse tensions between the world’s two largest economies over a slew of trade and technology issues, which remain at boiling point despite the 90-day grace period.
Only days ago, President Xi Jinping and US President Donald Trump had a phone call and agreed to further resolve their ongoing economic disputes.
“The trade outlook remains highly uncertain at this stage,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management.
“The front-loading of exports is still ongoing, which should help to keep the export activities sustained in June, but it may fade away some time in the second half of the year.”
Huang Zichun, China economist with Capital Economists, meanwhile, said tariffs seemed unlikely to be reduced further and there is still a risk that they could be hiked again, and “exports will also have to contend with a fading tailwind from real effective exchange rate depreciation”.
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”, he added.
China’s factory activity is showing signs of strain amid uncertain trade prospects. The official manufacturing purchasing managers’ index improved slightly in May to 49.5, from its 16-month low of 49 in April, but remained in contractionary territory.
Meanwhile, the Caixin manufacturing purchasing managers’ index (PMI), which focuses on smaller private companies, dropped to 48.3 in May – the lowest reading since September 2022, and down from 50.1 in April.


Among China’s major export destinations, exports to Vietnam increased by 22.03 per cent, year on year.
Vietnam has served as a key re-routing channel for Chinese goods headed to the US, which is Vietnam’s largest export market.
A second round of US-Vietnam tariff negotiations was held from May 19-22 in Washington, and, according to a Reuters report, the US sent a long list of requests that could force Vietnam to cut reliance on Chinese industrial goods imports.
Meanwhile, China’s exports to the European Union rose by 12.02 per cent in May.
The value of rare earth exports nearly halved in May to US$18.7 million, as China tightened exports of critical minerals.
China, the world’s largest buyer of agricultural goods, saw its farm-product imports grow by 0.74 per cent in May, year on year, to US$19.93 billion, with the value of soybean imports up 22.46 per cent, year on year.
Elsewhere, China’s automobile exports jumped 22.14 per cent to 695,000 units, pushing total sales to US$12 billion – a year-on-year increase of 13.73 per cent.
Meanwhile, the export value of integrated circuits rose by 33.43 per cent compared with a year prior, with shipment volumes climbing by 19.18 per cent.
On the import side, China bought 8.87 per cent more integrated circuits by value, with the number of chips imported also up, by 9.95 per cent.
Additional reporting by Carol Yang


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Data comes after China and the United States agreed to a temporary truce in their tit-for-tat tariff escalations last month


Data comes after China and the United States agreed to a temporary truce in their tit-for-tat tariff escalations last month.
