China's exports rose to the highest level in more than a year in May, the government said on Friday, as heavy shipments of home appliances, cars and electronics left factories and prospects of a global rebound strengthened.
China's exports rose 7.6% in May 2020 compared with May 2023, despite falling prices for many manufactured goods shipped from China.
China is rapidly building new factories and expanding existing ones as part of a national strategy, but Chinese household spending has been sluggish due to a long and sharp decline in apartment prices.
Much of the increase in factory production is being exported. Fewer Chinese households are buying new apartments, for example, so fewer home appliances are being sold domestically. The government said exports of home appliances rose 18.3 percent in May from the same month a year earlier. And prices for home appliances have plummeted as domestic demand in China slumps. The number of home appliances actually exported last month rose 27.8 percent.
China's trade surplus — the difference between what it earns from selling goods to the world and what it spends on imports — widened to $82.6 billion in May, up 25.6% from a year earlier, the biggest May on record and the best month outside the pandemic, when China exported huge amounts of medical equipment, exercise gear and other manufactured goods.
China's trade surplus tends to be fairly low in May and then much higher at the end of the year, when exporters supply goods for the Christmas season.
The volume of many exports, including electronics, is growing faster than their value. While containers full of goods are leaving China, the number of containers returning with imports is declining, leaving shipping companies with a container shortage in China.
China's imports rose just 1.8% in May.
Chinese companies are beginning to face further trade barriers. President Biden on May 14 increased tariffs on about 4% of Chinese exports to the United States. The European Union is expected to decide as soon as next week whether to impose tariffs on Chinese electric vehicle exports. Developing countries such as Brazil and India are also taking steps to protect their factories and industrial workers from Chinese competition.
China said on Friday that exports of trucks and cars rose 16.3% in May from a year earlier. A breakdown of gasoline, electric and diesel trucks is usually released at the end of the month.
The tariffs do not appear to have had a significant impact on Chinese exports so far and may even have a short-term positive effect, as some Chinese companies are rushing to ship goods to emerging markets such as Latin America before the tariffs take effect.
Over the past year, China has increased exports to Vietnam and Mexico, where products can be reprocessed and shipped at low or no tariffs to the U.S. or Europe. These more complicated trade routes, combined with a weaker Chinese currency exchange rate, could weaken the effectiveness of tariffs, according to research firm Capital Economics.
“Even if tariffs take effect, their impact may be mitigated by changes in trade routes and exchange rate adjustments,” the firm said in a research note.
China's growing trade surplus is helping to offset weakness in its domestic economy.
The lack of consumer confidence among Chinese consumers is easily seen on the streets of Shanghai and Beijing, where many restaurants are deserted, even on weekend nights. Shops have few or no customers, and shopkeepers stand around looking bored. Low-cost Chinese-made cosmetics are crowding out expensive foreign brands, and alcohol sales are slumping as consumers turn to beer.
The United States reported this week that its trade deficit widened sharply to $74.6 billion in April. JPMorgan said in a research note that the U.S. trade deficit will likely eat into economic growth this spring, reducing the April-June growth rate by almost a percentage point. The U.S. economy grew at an annualized rate of 1.3 percent in the first three months of the year.
Li Yu contributed to the research.