Stay informed with free updates
Simply sign up to the Chinese trade myFT Digest — delivered directly to your inbox.
China’s exports grew faster than expected in May, official customs data showed on Friday, in a boost to policymakers eager to drive economic momentum even as trade tensions rise.
Exports in dollar terms rose 7.6 per cent year on year last month, compared with expectations of a 6 per cent rise among economists polled by Reuters, and higher than any published figure since April last year.
Imports rose 1.8 per cent year on year, far behind forecasts.
The recovery in exports points to stronger overseas demand at a time when domestic consumption in China remains weak and has provided a further boost as officials target annual GDP growth of about 5 per cent for 2024.
Faced with the effects of a prolonged property slowdown in the mainland, Xi Jinping’s government has focused heavily on manufacturing as part of an upgraded industrial strategy that is fuelling trade tensions with the US and Europe.
“The drivers of growth seem to be investment into manufacturing as well as a pick-up in exports which is linked to stronger external demand,” said Carlos Casanova, senior economist for Asia at UBP.
He warned of a potential impact on Chinese exports if the US economy slowed in the second half of the year.
The emphasis on industrial strategy within China has invited growing international scrutiny. The US last month introduced tariffs of 100 per cent on imported Chinese electric vehicles, though their volumes remain small compared with total trade between the two countries.
The European Commission in the coming days is expected to publish the results of a probe into subsidies for China’s booming EV industry ahead of a July deadline.
China’s economic data has provided mixed signals in recent weeks. The official purchasing managers’ index released last week showed a decline in factory activity. A separate Caixin survey, which more closely tracks private rather than state-owned enterprises, showed a jump in activity in the same month.
April economic data from the National Bureau of Statistics showed stronger industrial production, which includes manufacturing, but weak growth in retail sales as consumers remained cautious. The IMF last month warned over the need for China to boost domestic demand rather than prioritise industrial strategy.
China’s exports soared during the Covid-19 pandemic but declined for much of 2023 as trade activity normalised.
In a sign of growing urgency over a property slowdown, authorities last month unveiled new measures allowing purchases of unsold housing by local state-owned enterprises.
Read the full article here
