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China’s exports to the US plunged last month by the most since the beginning of the Covid-19 pandemic, highlighting the stakes for Beijing as Chinese and US negotiators are set to meet in London on Monday for trade talks.
Exports to the US fell 34 per cent year on year in US dollar terms, according to Financial Times calculations based on official data, the biggest fall since February 2020 and steeper than April’s 21 per cent decline.
Trade has been an important driver of growth for China against the backdrop of a property slowdown. Overall exports increased 4.8 per cent year-on-year.
The data highlights the impact on exports of trade tensions between the world’s two biggest economies.
The expected London talks follow a telephone call last week between US President Donald Trump and his Chinese counterpart Xi Jinping. The two sides agreed on May 12 to a 90-day truce, which remains fragile amid a row over slow approval of rare-earth shipments.
“It’s likely that the May data continued to be weighed down by the peak tariff period,” said Lynn Song, chief China economist at ING. “We expect that export growth to the US could recover in the coming months.”
Separate data on Monday showed that in May China’s consumer prices declined for the fourth straight month and producer prices fell at their fastest pace in nearly two years.
The consumer price index fell 0.1 per cent year on year in May, the National Bureau of Statistics said on Monday. Producer prices, which reflect the cost of goods at the factory gate, dropped 3.3 per cent, the fastest rate of decline since July 2023.
Trade tensions have added to pressures from a property slowdown that began in 2021. Years of persistently weak price growth and periods of deflation have raised concerns over consumer confidence and added to calls for more stimulus from Beijing.
The People’s Bank of China last month announced cuts to key lending rates as part of a steady easing that has also seen mortgage rates reduced to support the housing sector.
Zichun Huang, China economist at Capital Economics, suggested that the trade data showed US tariffs weighing on overall exports.
“Early signs suggest that US demand for Chinese goods has recovered somewhat since the Geneva truce, which should ease the drag on exports in the near-term,” she noted. “But it seems unlikely to us that tariffs will be reduced further and there is still a risk that they could be hiked again
Song at ING said it was “hard to envision a significant uptick” in CPI as “domestic consumer sentiment remains soft and tariffs could cause further deflationary pressure”.
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