Chinese government data released on Friday gave a peek at how the trade war is already sorting the flow of goods around the world.
Exports from China were driven last month by trade to other countries in Southeast Asia.
Within China, imports fell as demand continued to weaken.
Trade numbers announced Friday were captured in April as tensions between the US and China escalated more rapidly than expected. In a series of measures, President Trump raised tariffs on Chinese products to 145%, and China responded by collecting 125% on American products.
As a result, China's freight to the US fell 21% compared to the same period last year. However, China's exports to Southeast Asian countries skyrocketed 21%.
“This is an early signal that something is happening in terms of supply chain front-loading,” said Raymond Yeung, China's chief economist at ANZ, Bank of New Zealand. “It's already a well-documented trade redirect,” he said.
China's exports to countries such as Vietnam and Thailand are skyrocketing, Yeung said data on imports from Taiwan and South Korea proposed that Chinese factories take advantage of a 90-day suspension of tariffs across the region to complete the order to the US.
Overall shipping of products from China has been flew 8.1% in April compared to the previous year. The data showed a continuation of trends in Chinese factories in the past few months, rushing to ship goods as the trade war worsened. Many of these products have become several export-oriented countries of the Association of Southeast Asian Countries or the ASEAN Association.
“Domestic producers have stopped most of their production targeting the US market, but they are preparing products from ASEAN countries because they have set up factories to prepare for this situation,” said Dan Wang, director of the Chinese team at the Eurasia Group.
In recent years, China's domestic economy has been hampered by housing market conflicts, and the government has been leaning heavily towards shipping overseas goods. The property crisis has spread across other economies, with banks and local governments stuck to a mountain of debt, and young people suffering from lack of job options.
The April data is likely to bring life to Beijing policymakers amid wider concerns about the impact of the trade war on China's economic outlook. But economists warn that refusing factory orders could lead to a surge in unemployment if they force businesses to fire workers. The Chinese factory experienced the sharpest monthly slowdown in April in more than a year.
This week, China's financial regulators have shown they are ready to boost domestic demand to survive the effects of the trade war. Central banks have cut interest rates, loosened money, and encouraged businesses and people to spend more money towards the economy.
US Treasury Secretary Scott Bescent and US Trade Representative Jamieson Greer will meet with China's deputy prime minister, his Lifeeng this weekend in Geneva.
Zixu Wang Contributed to the report from Hong Kong.
