China’s export growth accelerated in May amid heightening trade frictions, fuelled by surging demand from Southeast Asia and a lower base effect, while its trade surplus also widened from April.
Exports rose by 7.6 per cent from a year earlier to US$302.4 billion in May, the highest monthly export value since September, according to customs data released on Friday, offering Beijing a promising path toward its annual growth target.
The reading beat the expected increase of 6.35 per cent surveyed by Chinese financial data provider Wind, and was also better than the increase of 1.5 per cent in April.
“We think exports will remain strong in the coming months, defying the expansion of Western tariffs,” said analysts at Capital Economics.
“We expect exports to stay strong in the coming months, supported by a weaker real effective exchange rate. Foreign tariffs are unlikely to immediately threaten exports; 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 re-routing and adjustments in the exchange rate.”
Elsewhere, imports, meanwhile, rose by 1.8 per cent from a year earlier, compared to a 8.4 per cent increase in April.
“In volume terms, imports appear to have been broadly unchanged. But we expect them to increase in the coming months. A fresh wave of fiscal support (government bond issuance surged to a seven-month high in May) is likely to bolster construction activity, driving up demand for industrial commodities,” added analysts at Capital Economics.
The quick uptick in export growth in May was partly due to a lower base in the same month last year, when China reported a steep export decline of 7.5 per cent year on year.
China’s exports to the Association of Southeast Asian Nations rose significantly by 22.5 per cent in May, the highest monthly growth since March 2023.
Shipment to the United States also reported the first year-on-year rise in three months after increasing by 3.6 per cent in May.
Exports to Russia, meanwhile, fell by 1.96 per cent year on year in May, compared to the double-digit decline in April.
Within May’s export data, the value of car shipments rose by 16.63 per cent year on year in May, while the value of ship exports surged by 57.1 per cent.
01:52
US proposes new round of tariffs on China in latest trade war escalation
US proposes new round of tariffs on China in latest trade war escalation
Exports of integrated circuits also rose by 28.47 per cent by value last month compared to a year earlier, while shipments of hi-tech products rose by 8.1 per cent.
Elsewhere, China’s trade surplus stood at US$82.6 billion in May, compared with US$72.4 billion in April.
Export growth in the world’s second-largest economy had fallen in 2023 for the first time in seven years, but rising overseas demand this year is boosting China’s trade sector and giving Beijing hope that it can buffer sluggish domestic demand and meet its 5 per cent annual economic growth target.
The United Nations has revised its prediction for China’s economic growth in 2024 to 4.8 per cent, while the International Monetary Fund also revised its projection this year to 5 per cent.
“A more pronounced rebound in global trade is likely in the second half of 2024, especially if the United States Federal Reserve and the European Central Bank begin to cut policy rates,” the United Nations said.
