In the midst of the trade war, China’s trade with the United States saw a significant decline in the first half of this year. In terms of US dollars, China’s exports to the US dropped by 10.9% year-on-year.
According to the General Administration of Customs of the Communist Party of China, on Monday (July 14th), data was released indicating that in June, export value increased by 5.8% year-on-year when measured in US dollars, with the growth rate being 1% higher than that of May. Import value also saw a 1.1% year-on-year increase, compared to a 3.4% decrease in the previous month, resulting in a trade surplus of $114.77 billion for that month. Looking at the period from January to June, China’s export value increased by 5.9% year-on-year, while import value declined by 3.9%.
For the first half of the year, China’s top three export markets were the Association of Southeast Asian Nations (ASEAN), the European Union, and the United States. Among them, exports to ASEAN increased by 13.0% year-on-year, while exports to the US decreased by 10.9% and exports to the EU grew by 6.6%.
In terms of monthly data for June, exports to the US decreased by 16.1% year-on-year, showing a narrowing of the decline by 18.4 percentage points from May.
When measured in Chinese yuan, during the first half of the year, China’s total import and export value with the US decreased by 9.3% year-on-year, with exports dropping by 9.9% and imports by 7.7%.
Deputy Director Wang Lingjun of the General Administration of Customs stated that due to the impact of US tariffs, China-US trade volume shifted from growth in the first quarter to a decline in the second quarter, with a decrease of 20.8%. Progress has been made in economic and trade talks in Geneva and London, leading to a slight recovery in China-US trade.
According to Jiemian News, Wang Qing, Chief Macro Analyst at Orient Securities, predicts that there is a significant risk of a slowdown in export growth in July. The main reasons include the further weakening of various types of “diverted exports” and “grabbed exports,” with about 41.3% of US tariffs on China continuing to significantly inhibit exports to the US. Additionally, the overall slowdown in external demand will also result in a slowdown in China’s export growth to various economies including emerging markets.
Wang expects that China-US economic and trade negotiations will go through a complex and tortuous process. The drag on Chinese exports from external environmental fluctuations is likely to be more pronounced in the second half of the year, with export growth rates potentially entering negative territory in the later months.
He believes that as export growth continues to decline in the latter part of the year, the impact of external environmental fluctuations on imports will also be evident, leading to a possible sustained year-on-year decline in import growth in the second half. Apart from the trade war, another major factor affecting imports in the future will be the effectiveness of domestic policies aimed at boosting domestic demand.
The report mentioned that the Federal Reserve Securities also pointed out in a research report that exports may come under pressure in the second half of the year. Firstly, exemptions for China’s 24% equivalent tariffs may expire in August. Secondly, the tariff legislation for over 20 categories of goods, including exempted computer and semiconductor components, could be enacted in November. These factors are likely to disrupt China’s exports to a certain extent. Lastly, the focus on “grabbing exports” and “diverting exports” in the first half of the year may have already exhausted demand for the latter half.