China’s exports grow in May despite nosedive in US trade

Trade between China and the US is collapsing.

Per data released by the customs bureau (GAC) on Monday:

• China’s aggregate exports grew 4.8% y/y in May, down from 8.1% the previous month
• Imports shrank 3.4% y/y, accelerating from April’s 0.2% decline
• China’s trade surplus hit USD 103.2 billion, up 26.9% y/y and marking the highest May trade surplus on record

While total exports grew, shipments to the US dropped a staggering 31.5% y/y, following a 21.0% drop in April.

• Imports from the US fell 18.1% y/y, worse than April’s 13.8% contraction.

Year-to-date, total trade between the two countries has fallen below 2018 levels.

As in April, Chinese exporters mitigated the drop in trade with the US by ramping up shipments to other countries. Throughout May, exports to:

• ASEAN grew by 14.8% y/y
• The EU grew by 12.0%
• Africa grew by 33.3%

Get smart: Despite the slowdown in export growth, this is still a reasonably good trade print.

• Exporters’ ability to diversify shipments to new markets will give Beijing confidence that China’s economy can survive a trade war with the US.
• Meanwhile, should the world’s two largest economies reach a lasting trade agreement, Chinese exports to the US will rebound, catalyzing even faster export growth.