Foreign trade China's trade with the USA slumps significantly
China's trade with the USA has slumped massively in light of the disputes between the world's two largest economies. According to data from the customs authority in Beijing, exports and imports fell significantly, as they did in April.
09.06.2025, 06:14
09.06.2025, 06:47
SDA
In May, exports calculated in US dollars fell by 34.5%, while imports dropped by 18.1% compared to May 2024.
In mid-May, both sides agreed to a pause and a significant reduction in the surcharges on goods from the other country in the previously escalated tariff dispute. Today, senior representatives from both countries want to continue discussing trade issues in London.
However, some problems remain, such as Beijing's export controls on the export of rare earths and magnets, which are important for industry and for which China is the world's main processor. The USA restricted the sale of cutting-edge technology such as design software for computer chips or important components for aviation, for which China is dependent on foreign countries.
How China's economy fared overall
As recently as April, China's foreign trade had significantly exceeded the expectations of many observers. The assumption was that the People's Republic would be able to increase exports of its goods to other countries in particular.
Overall, China's foreign trade grew again in May. Exports increased by 4.8 percent compared to the same month last year. Imports, on the other hand, fell by 3.4 percent. The trade surplus amounted to around 103 billion US dollars.
The latest figures therefore fell just short of analysts' expectations. On average, they had anticipated an increase in exports of around five percent and a slight decline in imports.
What is worrying China's economy
The People's Republic continues to experience weak domestic demand. This is also reflected in the steady decline in imports. Beijing's industrial policy has so far led to certain sectors producing significantly more than the market could absorb. As a result, many goods are being exported at low prices. One example is the solar industry.
The fact that people in China are not consuming enough is also due to the consequences of the severe real estate crisis. Many people have invested in apartments that are worth less due to the fall in prices, which is depressing consumer sentiment. The weakness in this sector, which is otherwise so important for the economy, is also weighing on companies and local governments.
Deflationary pressure is also a problem for China's economy. As the statistics office announced today, consumer prices in May were 0.1 percent lower than a year earlier. Deflation, i.e. the opposite of inflation, provides consumers with stable prices at the checkout, but in the long term it puts pressure on companies' profits, which can lead to wage cuts or job losses.
