Image reproduced from 中國台灣網

According to data released by China's General Administration of Customs on June 9, China's exports to the United States in May 2025 fell by 34.5% year-on-year, marking the largest decline since the onset of the pandemic in 2020, thus drawing widespread attention. While exports to ASEAN, Europe, and Africa have increased, they have not compensated for the drastic drop in exports to the U.S.

Despite a temporary tariff relief agreement reached by Beijing and Washington in mid-May that lasts for 90 days, data indicates that trade tensions between the two nations remain unresolved. In addition to the sharp decline in exports to the U.S., imports from the U.S. have also decreased by 18.1%, leading to a 41.55% reduction in China's trade surplus with the U.S., which now stands at $18 billion. Meanwhile, China's overall trade surplus still increased by 25% year-on-year, reaching $103.2 billion.

As exports decline, domestic imports in China have also shown poor performance. Official data revealed that overall exports in May increased only by 4.8% year-on-year in U.S. dollars, falling short of the expected 5% and below April's 8.1%. Meanwhile, imports decreased by 3.4% year-on-year, significantly lower than market expectations. Due to high tariffs imposed by the U.S., Chinese exporters have started shifting their focus toward Southeast Asia, Europe, and Africa. In May, exports to ASEAN saw an annual increase of nearly 15%, while exports to the EU and Africa grew by 12% and over 33%, respectively. However, these increases still do not completely offset the steep drop in exports to the U.S.

Xu Tianchen, a senior economist at the EIU, pointed out that despite partial tariff relief achieved in mid-May, “the damage has already occurred.” He noted that tightened export controls on rare earth elements by the Chinese government have virtually halved the shipment volumes of certain items. Additionally, exports of smartphones and home appliances fell by 10% and 6%, respectively. On the other hand, exports of automobiles and ships continued to grow, with year-on-year increases of 22% and approximately 5% in May.

Moreover, soybean imports skyrocketed to a record 13.92 million tons in May, reflecting a year-on-year increase of 36.2%. However, imports of major energy resources such as crude oil, coal, and iron ore saw significant declines, further indicating a persistent weakness in domestic demand. Regarding price performance, China's consumer price index (CPI) decreased by 0.1% year-on-year in May, while the producer price index (PPI) dropped by 3.3%, marking the largest decline in nearly two years and highlighting intensified deflationary pressures.

Despite a series of stimulus measures implemented by Beijing, including the reduction of LPR and the provision of 500 billion yuan in low-interest loans, the performance of the real estate market and retail sector remains sluggish, further aggravating dependence on foreign trade.

It is anticipated that U.S.-China negotiations will continue in London during the second round of talks, addressing controversies from the previous Geneva Agreement. Earlier, both sides accused each other of breaching agreements, with the U.S. criticizing China for delaying approvals of critical mineral exports; China has retaliated by pointing out U.S. restrictions on visas and strengthened semiconductor export controls.

On the overall situation, economist Huang Zichun from Capital Economics stated that the export slowdown in May predominantly reflects a slip in orders ahead of negotiations, and a rebound is expected in June. However, she cautioned that current tariff measures are unlikely to loosen further and carry the risk of being raised again, posing further challenges to China's export outlook.

Amid the interplay of internal and external pressures, competition in the Chinese market is intensifying, particularly in the automotive sector. To seize market share, many auto companies have recently initiated another wave of price cuts, reflecting that the Chinese economy remains in a period of high uncertainty.