BEIJING: Growth in China’s exports likely slowed in May despite a lowering of U.S. tariffs on Chinese goods, as the fallout from the still-unresolved trade war and uncertainties in Sino-U.S. ties weighed on shipments.
Outbound shipments are projected to have risen 5.0% year-on-year in value terms last month, according to the median forecasts of 20 economists polled by Reuters.
That compares with an 8.1% jump in April.
Imports are forecast to drop 0.9% in May from the previous year in value terms, widening from a 0.2% dip in April.
The global trade war and the swings in China-U.S. trade ties have in the past two months sent Chinese exporters, along with their business partners across the Pacific, on a roller coaster ride.
An hour-and-a-half-long phone call between U.S. President Donald Trump and Chinese leader Xi Jinping late Thursday kept the lid on tensions but left key trade issues such as Beijing’s control on rare earth exports and Washington’s curbs on chip-related exports to further talks.
In mid-May, China and the United States struck a 90-day truce in their bruising tariff war and walked back most of the triple-digit levies they heaped on each other’s goods, which had taken effect in early April.
Those tariffs, as well as uncertainties surrounding the global trade order after the Trump administration ordered a 90-day pause to its “reciprocal tariffs” on other trade partners, had accelerated China’s exports in March and April, as factories rushed out shipments to the U.S. and overseas manufacturers.
The lowering of U.S. tariffs on China, however temporary, was welcome news to China’s policymakers as they seek to shore up an economy reliant on exports and beset by lacklustre domestic demand and sagging prices.
Economists polled by Reuters appear divided on how the turnabout from the Geneva trade talks would impact China’s overall exports last month, with estimates ranging from a 9.3% growth to a 2.5% drop.
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The tariff truce might trigger a new round of frontloading and reduce the urgency for the Chinese government to “roll out a sizable stimulus package and start some necessary structural reforms”, Nomura analysts wrote in a report on May 23.
The Nomura analysts estimate that average U.S. tariffs on Chinese imports could remain “hefty at about 42%” even without further hikes, and expect China’s export growth to slow down sharply in the second half of the year.
China’s first-quarter economic growth beat expectations, but any cheer was overridden by persistent strains in China-U.S. ties.
Factory activity data for May shows Chinese manufacturers may have already felt the tariff pains.
The official manufacturing purchasing managers’ index (PMI) shrank for a second month in May, while the gauge in a private-sector survey shrank for the first time in eight months.
The central bank last month cut benchmark lending rates to lessen the impact of the trade war on the economy, and lowered the ceiling for deposit rates to offset margin pressure on banks and prompt savers to spend or invest more.
China’s May trade surplus is forecast at $101.3 billion, up from $96.18 billion in April.
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