Official data released on Friday, May 9 show that despite escalating trade tensions with the United States, China’s export rate rose in April. The 8.1% year-on-year growth is well ahead of analysts’ 2% growth forecast, suggesting that Beijing may be relocating its trade flows to mitigate the impact of U.S. tariffs.
Trade data released by China Customs Administration shows that exports to Southeast Asian countries such as Thailand, Indonesia and Vietnam have increased significantly, while exports to the United States have dropped sharply by 17.6%. Analysts say the trend reflects a strategic shift in the trade route as China tries to mitigate the blow of up to 145% tariffs imposed by the Trump administration. In response, China imposed tariffs of up to 125% on U.S. goods, further deepening the standoff between the world’s two largest economies.
Stephen Innes of SPI Asset Management describes this transformation as a “structural repositioning” of global supply chains. “Global supply chains are being rerouted in real time,” he said. “Vietnam looks to be China’s maritime escape hatch for U.S. goods. The manufacturer’s Juggernaut is shifting traffic, regardless of tariff pain.
Despite the trade war, Australian researchers say China’s central role in global manufacturing means it’s still difficult to exclude the country from the supply chain. “The implied supply chain readjustment and the expected results of the Asia-U.S. trade negotiations suggest that China’s exports will not collapse,” they noted.
Trade data has been released ahead of a key meeting between U.S. and Chinese officials in Geneva, the first formal dialogue since President Donald Trump launched a tariff offensive to restore manufacturing jobs to the United States. Washington hopes the discussion will lead to a “downgrade”, but Beijing says it will firmly defend its interests.
Zhang Zhang, president and chief economist at Pinpoint Asset Management, attributed the exceeding expectations of export figures to “transshipment through other countries” and to trade contracts signed before the latest round of tariffs was announced. “I expect trade data to weaken in the coming months,” he warned.
On the import side, China reported a slight decline of 0.2%, which ignored expectations of a 6% decline. A modest decline is seen as an indicator of the persistent weakness of domestic consumer demand. In response, Chinese policymakers have formulated a series of monetary easing measures aimed at stimulating the economy. These include lower interest rates and reduced bank reserve requirements to encourage loans.
The efforts to restore the struggling real estate sector, a major pillar of China’s economy, have also been intensified. The central bank announced that mortgage rates for first-time home buyers have lowered loan terms for more than five years, below 2.6% and below 2.85%, the most important policy move since September.
However, some economists warn that policy measures may not be enough. Gary Ng, a senior economist in the Asia-Pacific region of Natixis, said that while tariffs are likely to be adjusted based on the outcome of trade negotiations, uncertainty surrounding U.S.-China relations are still challenging. “Even if tariffs may be adjusted based on the outcome of the U.S.-China trade negotiations, the ongoing uncertainty will continue to accelerate structural decoupling,” he said.
