China’s exports beat gloomy forecasts to rebound in May though imports sank more than expected, official data showed Monday, as concerns lingered about the impact of its ongoing trade war with the United States. The spat between the world’s top two economies escalated last month, with President Donald Trump increasing tariffs on $200 billion in Chinese goods.
But Chinese exports to the world bounced back to rise 1.1 percent last month after falling 2.7 percent in April, according to customs data. Analysts surveyed by Bloomberg News had forecast a 3.9 percent drop. Imports, however, plummeted 8.5 percent after rising 4.0 percent in April. The trade surplus surged to $41.7 billion in May compared with $13.8 billion the previous month. The politically sensitive surplus with the United States was $26.9 billion, up from $21 billion in April.
Trade talks between Beijing and Washington have stalled while the two countries have threatened to slap more sanctions on each other. Trump has blacklisted Chinese telecom giant Huawei and warned that he could impose tariffs on nearly all remaining products from China, worth more than $300 billion. Beijing responded to Trump’s latest tariff hike by increasing levies on $60 billion of US products on June 1.
China is also preparing its own blacklist of “unreliable” companies and has suggested that it could halt exports of rare earth minerals — key to the production of many high-tech goods — to the United States. Trump is expected to meet Chinese President Xi Jinping at the G20 summit in Japan at the end of the month. US Treasury Secretary Steven Mnuchin said at a G20 meeting of finance ministers Saturday that any potential deal with China will wait until the two presidents meet later this month, but Washington was ready to impose new tariffs if talks fail.
– Tumble expected –
Analysts said despite the rebound in exports, China’s trade outlook is likely to suffer because of the turbulence ahead. “While exports rose in May, weaker global demand and the escalating trade war suggest that they will start to fall again before long,” Marcel Thieliant, senior economist at Capital Economics, said in a note.
Others attributed the bounce in May to exports being scheduled so they are shipped ahead of when tariffs kick in, pointing to a likely drop later in the year. “The better-than-expected exports in May, which could have been helped by a depreciation in… (China’s currency) and front-loading of shipments amid fears of higher US tariffs, do not change our overall cautious view on China’s export look for 2019,” Betty Wang, Senior China Economist at ANZ Research, said in a note.
The export turbulence ahead could prompt Beijing to intervene and stimulate the economy. The growth of China’s exports should “tumble in Q3, when we expect the threatened tariffs to be imposed,” Nomura International said in a note. “Therefore, we believe Beijing is to step up its stimulus measures to stabilise financial markets and growth.”