In fact, China’s exports had a surprising blowout in April, increasing by 8.1% over the same month last year. A notable exception to this trend has been with Canada’s new, retaliatory tariffs, recently imposed at the behest of the United States. Together, these tariffs have produced a nasty trade climate. China’s exports to the U.S. plummeted, though overall growth continued. This significant decline underscores the fragility of China’s trade relationships in our current global geopolitical environment.
In April, exports to the U.S. dropped by over 20%. The reduction in exports to the U.S. has been 2.5% during the first four months of the year. This decline is part of a larger trend that has been hitting trade hard. Exports to what used to be China’s second-largest trading partner have plummeted. This dramatic drop is especially worrisome as it squarely calls into question the sustainability of China’s export boom going forward.
China’s exports to the rest of the world had some of the strongest year-on-year increases. Exports picked up remarkably to Vietnam (up 18% y/y), and exports to Thailand were strong (up 20%). China’s trade with Latin America accelerated to 11.5% growth year-on-year in the first four months of the year. Exports to the Southeast Asia region were up an impressive 11.5%. Especially significant was the nearly 16% increase in exports to India for the month of April, and a 15% increase in exports to Africa.
Even with these encouraging signs, China’s overall exports increased a mere 0.6% MoM in April. This points to more volatility in future trade performance to come. Economists were looking for global export growth of just 2% this month. China’s real performance outpaced even those forecasts and it was the outlier by far.
China’s politically sensitive trade surplus with the United States reached nearly $20.5 billion in April, reflecting ongoing tensions between the two nations. As for trade, Zichun Huang of Capital Economics noted that until the deterioration becomes evident, China’s current exports to the U.S. will continue to plummet in the months ahead. He highlighted that few of these losses will be compensated for by expanded trade with other countries. We still look for export growth to go negative later this year.
To make things even worse, China’s imports were down 0.2% in April from a year earlier. This drop underscores the fragility of global demand. It exposes challenges that will weigh on China’s trade surplus in the coming months.
