In June, China’s exports saw a resurgence as businesses aimed to capitalize on the fragile tariff ceasefire between Beijing and Washington, especially with strong shipments to Southeast Asia’s transport hubs.
Firms on both sides of the Pacific are now uncertain about whether the world’s two largest economies can solidify a more stable deal.
In the U.S., where over $400 billion in goods are traded annually, Chinese manufacturers, facing decreased domestic demand and increasingly tough conditions, are trying to secure a bigger share in nearby markets.
Recent customs data revealed that exports from China grew by 5.8% year-on-year in June, surpassing expectations of a 5.0% increase and improving from a 4.8% growth in May.
A senior analyst at the Economist Intelligence Unit noted that while there may be continued frontloading before the August tariff suspension deadline, shipping costs from China to the U.S. have started to drop.
This ongoing trade realignment is likely to catch the eye of policymakers in the U.S. and beyond.
After experiencing a 3.4% drop in May, imports saw a recovery of 1.1%, although economists had anticipated a 1.3% increase.
Positive data helped buoy market sentiment, with the Blue Chip CSI300 climbing by 0.2% during daytime trades, while Shanghai’s composite index rose by 0.4%, nearing its highest point since October.
Analysts and exporters are monitoring whether the deal made in June will hold firm, especially after May’s agreement faced challenges due to a series of export controls that disrupted significant global supply chains.
In terms of raw numbers, exports to the U.S. soared by 32.4% monthly, benefiting from the decline in tariffs enacted in June, though annual growth remained negative.
On the other hand, outbound shipments to Southeast Asian nations jumped by 16.8%.
China recorded a trade surplus of $114.7 billion in June, a rise from $100.3 billion in May.
Moreover, exports of rare earth materials surged by 32% compared to the previous month, indicating that recently executed contracts might be yielding results.
However, analysts suggest that Chinese negotiators might struggle to persuade the U.S. to lower tariffs to levels that enable producers to maintain profit margins. Additional duties exceeding 35% could be detrimental.
“Tariffs are likely to stay elevated, which may hinder Chinese manufacturers’ ability to significantly reduce prices and rapidly boost global market share,” remarked an economist. Expectations are for export growth to decelerate in the next quarter, affecting economic growth.
World Trade War
Beijing faces a deadline on August 12 and is looking for a lasting deal with Washington.
Meanwhile, Trump is continuing to expand his global trade measures with new tariffs targeting other partners.
Analysts caution that these actions could unintentionally impact Beijing by straining third countries that are crucial for transshipping Chinese goods.
Trump has recently imposed a 40% tariff on U.S. transportation via Vietnam.
He also threatens a 10% charge on imports from BRICS countries, which includes China, creating additional risks for Beijing.
In June, meanwhile, China’s soybean imports reached a record high due to a surge in purchases from Brazilian suppliers, despite challenges from a 50% tariff imposed by Trump. In contrast, China’s own soybean imports were notably low at 724,000 tonnes.
Chinese crude imports rebounded as well, hitting the highest daily levels since August 2023 following expansions in operations at Saudi and Iranian refineries, and iron ore imports have risen by 8% since May.
