China exports jump 7.6% in May as trade curbs loom

China’s exports expanded for the second straight month in May, lending support to the world’s No. 2 economy, which is plagued by a prolonged property crisis and soft domestic demand.

The total value of overseas shipments climbed 7.6% on the year in dollar terms, accelerating from the 1.5% rise recorded in April, according to data released by the country’s customs office on Friday.

The number was aided by a low base and was higher than a 6.0% increase forecast in a Reuters poll of economists.

Dollar-denominated imports, meanwhile, grew 1.8% on the year in May after jumping 8.4% the previous month, falling well short of an estimate of a 4.2% gain in the Reuters poll.

Growing amounts of cheap Chinese goods in the international market have agitated China’s trading partners, which have fought back with countermeasures. The U.S. last month announced an increase in tariffs on electric vehicles, solar panels, semiconductors and certain steel and aluminum products from China. The European Union is expected to slap new duties on Chinese EVs in the coming week or so. In Latin America, Chinese steel exporters are facing higher tariffs imposed by Mexico, Chile and Brazil.

China’s manufacturing activity unexpectedly contracted in May. The indicator of new export orders, a component of the official manufacturing purchasing managers’ index, declined to 48.3, below the 50-point threshold that separates growth from a contraction.

Nevertheless, “export values rose [year on year] at the fastest pace since April 2023, with export volumes also picking up,” Zichun Huang, China economist at Capital Economics, said in a note.

“Foreign tariffs are unlikely to immediately threaten exports,” she said. “If anything, they may boost exports at the margin as firms speed up shipments to front-run the duties. Even once tariffs are in force, their impact could be mitigated through trade rerouting and adjustments in the exchange rate. We anticipate double-digit growth in export volumes this year, which will allow the economy to grow by 5.5%.”

The research firm recently upgraded its GDP growth outlook for China for this year from 5.0%.

Huang also said that China’s imports would “probably rise soon, with increased government spending supporting the import-intensive construction sector.”

The strong exports were led by high-tech products such as integrated circuits, the value of which soared 28.5% on the year in May. Exports of cars remained strong at $10.5 billion, slightly lower than April’s amount, while the quantity increased by 13,000, indicating a drop in average prices.

Exports to Brazil and the Association of Southeast Asian Nations again led the growth, surging 48.9% and 22.5%, respectively. However, imports from Brazil plunged by 17.7% in May after gaining 20.7% in April.

Imports were dragged down by a 13.6% drop in the value of agricultural products bought into the country. Among other major trading partners, imports from South Korea and Taiwan grew significantly while those from the U.S. were down 7.8%.

China’s trade surplus stood at $82.62 billion in May, up from $72.35 billion in April. For the first five months of 2024, Chinese shipments overseas rose 2.7%, while inbound trade gained 2.9%.

Source: Nikkei Asia

Click here to read the original text: https://asia.nikkei.com/Economy/Trade/China-exports-jump-7.6-in-May-as-trade-curbs-loom

Sharing is caring!