Despite experiencing several months of early exports to cope with U.S. President Trump’s tariffs on China, unexpected declines in Chinese exports occurred in October, marking the seventh consecutive month of significant decline in exports to the United States. This reflects investors’ concerns about the broader economic impact of the deteriorating Sino-U.S. trade relationship, adding further challenges to the Chinese economy already facing the risk of slowing growth towards the end of the year.
According to official data released on Friday (November 7), Chinese exports saw their first decline in eight months, dropping by 1.1% year-on-year. Analysts surveyed by Bloomberg had previously forecast a median growth of 2.9%, with only one analyst predicting a decline in exports.
In October, Chinese exports to the United States fell by just over 25%, marking the seventh consecutive month of significant decline. Meanwhile, exports to the European Union increased by 1%, the slowest growth since February’s decline.
Exports to some other key markets also experienced decreases, with sales to South Korea, Russia, and Canada all showing double-digit declines. Excluding the United States, exports to all other markets increased by 3.1% year-on-year, the lowest growth since February.
In October, overall import growth in China significantly slowed to just 1%, below economists’ expectations of 3.2% and far lower than September’s 7.4% growth rate. This indicates weak domestic demand and uncertainties in the labor market.
Early indicators suggest that China’s economic growth slowed in October. The official Purchasing Managers’ Index fell to its lowest point in six months, indicating that global markets have already absorbed limited Chinese goods in the short term, with factory owners reporting significant decreases in new export orders.
Despite a sharp increase in exports in the previous quarter, China’s economic growth has slowed to its lowest level in a year, with the possibility of further deceleration in the coming months.
At the beginning of October, tensions between China and the U.S. escalated sharply. Previously, Trump had warned of imposing 100% tariffs on Chinese goods due to Beijing significantly expanding its export controls on rare earth metals. Last week, Trump met with Chinese President Xi Jinping in South Korea, and both parties agreed to extend the trade truce agreement set to expire on November 10 for an additional year, easing tensions thereafter.
Since the Chinese New Year holiday in February slowed export activities, China’s exports had been growing every month, believed to be a result of American buyers rushing to ship goods before the high tariffs took effect. However, in October, a series of trade indicators started to decline, with container throughput at the port of Shanghai dropping to its lowest level since April, indicating a decline in export of enterprise products.
With the U.S. set to reduce tariffs on Chinese goods next week by 10%, Sino-U.S. trade is expected to rebound before the end of the year. However, the impact of this rebound may be limited as Chinese goods exported to the U.S. still face an average tariff of about 45%, higher than the 35% that some economists believe will squeeze Chinese manufacturers’ profit margins and still higher than the tariffs on goods from countries like Vietnam.
Bloomberg economist David Qu stated, “The unexpected decline in exports in October shows that China’s external resilience is beginning to weaken under the impact of high tariffs and global trade uncertainties. This highlights the necessity for Beijing to continue supporting domestic demand and preventing weak consumption from dragging down economic growth.”
Economists estimate that losing the U.S. market has caused Chinese export growth to decrease by approximately 2 percentage points, equivalent to a loss of around 0.3% of gross domestic product (GDP).