Despite escalating trade tensions with the U.S. and Europe, China’s exports for May exhibited a robust performance, surpassing analyst expectations and underscoring the resilience of the country’s export sector. According to customs data released on Friday, exports surged by 7.6% compared to the same period last year, reaching a total value of $302.35 billion. This growth rate represents the fastest pace of expansion since April 2023. However, imports experienced a more modest increase, rising by only 1.8% to $219.73 billion, falling short of the estimated 4% growth anticipated by analysts.
The remarkable growth in exports can be partially attributed to a favorable comparison to the same period last year when exports had declined by 7.5%. Despite this, the widening trade surplus, which reached $82.62 billion in May compared to April’s $72.35 billion, underscores the strength of China’s export sector.
Trade tensions between China and major trading partners such as the U.S. and Europe have escalated in recent times, with the U.S. imposing tariffs on China-made electric cars and Europe considering similar measures. Despite these challenges, analysts suggest that foreign tariffs may not immediately threaten exports and could even stimulate them, as companies might expedite shipments to circumvent the imposition of duties.
Zichun Huang, an economist from Capital Economics, notes that exports are likely to be buoyed by a weaker real effective exchange rate. Additionally, Huang anticipates a forthcoming increase in import volumes, particularly with increased government spending bolstering the import-intensive construction sector.
However, despite the positive export figures, China’s economic recovery from the COVID-19 pandemic has encountered hurdles. Factory activity in China slowed more than expected in May, according to an official survey, with the manufacturing purchasing managers index declining to 49.5 from 50.4 in April. This slowdown reflects weakened demand globally, driven in part by central banks raising interest rates to counter inflation. Furthermore, a downturn in China’s property sector is also contributing to overall growth challenges.
To address these economic headwinds, China has set an ambitious target of around 5% economic growth for this year. Achieving this goal will likely necessitate additional policy support and proactive measures to stimulate domestic consumption and investment.
As China navigates these complex economic dynamics and trade tensions, the performance of its export sector will continue to be closely monitored as a key indicator of economic resilience and stability in the global market.
