China's export growth rate turned negative

Exports fell 7.5 per cent in May

Recently, China's General Administration of Customs released the latest foreign trade statistics in May less than expected.

The value of China's imports and exports in May was $501.191 billion, down 6.2 percent year on year. Among them, the total export value was 283.499 billion US dollars, down 7.5% year-on-year; The total value of imports was 217.692 billion US dollars, down 4.5% year-on-year. The trade surplus was US $65.807 billion, down 16.1% year on year.

Since October, China's three main data points - the value of imports and exports, the value of exports and the value of imports - have been falling year-on-year for many months in dollar terms.

Strong year-on-year growth of 14.8 per cent in March and 8.5 per cent in April was widely seen as a sign that China's foreign trade was back on track.

With the recovery of trade in these two months, the value of China's imports and exports fell slightly by 2.8% year-on-year in dollar terms in the first five months of this year, while the value of exports and imports rose slightly by 0.3% and fell 6.7% respectively.

However, some institutions represented by ING attributed the recovery of foreign trade growth in March to April to the low base effect brought by the epidemic control measures in April last year, and the not optimistic foreign trade data in May also confirmed that the shrinking trade volume of developed economies to China will continue to put pressure on foreign trade.

The value of imports and exports between China and major developed economies almost uniformly contracted, compared with a 2.1 per cent year-on-year increase to $377.1bn in the January-May period with ASEAN, China's largest trading partner.

In the first five months of this year, the value of China's imports and exports to the European Union, its second largest trading partner, shrank 3.7 percent year-on-year to $331.7 billion, while those to the United States, its third largest trading partner, fell 12.3 percent year-on-year to $274.7 billion. The value of imports and exports to Japan and South Korea also fell 10.4% and 15.5% to $131.26 billion and $128 billion, respectively.

In May, China's export growth rate turned negative, behind the main three reasons:

First, due to the downward momentum of overseas economic growth, especially the decline in the growth of developed economies such as the United States and Europe, the current external demand is weak on the whole, which was fully reflected in May. Second, after the peak of the epidemic in May last year, the growth base of China's exports has been greatly increased, which will also lower the year-on-year growth level of exports in May this year. Third, the recent market share of China's exports in the United States has declined rapidly, and more imports from the United States have turned to Europe and North America, which is behind the strong toughness of high-value durable consumer goods in the structure of imports from the United States, which also has a certain impact on our overall exports.

Imports from the US contracted across the board

On June 7, the US Department of Commerce released foreign trade data, the US in April seasonally adjusted imports reached 260.9 billion US dollars, down 6.6%; Exports were valued at $163.8 billion, down 5.7 percent from a year earlier.

It was the third month in a row that both U.S. imports and exports fell year-on-year.

Meanwhile, the U.S. trade deficit also rose to $97.1 billion in April, the highest level in the past six months. Christopher Rupkey, chief economist at Bank of Mitsubishi UFJ in New York, said, "The terms of trade are deteriorating, which will take real economic growth down to a near-stagnant 1 percent in the second quarter."

In addition to the decline in U.S. foreign trade with China, U.S. trade with other major economies around the world is also shrinking.

In April, the value of US imports into the North American Free Trade Agreement area reached $72.5 billion, down 5.9% from a year earlier. The total value of imports to the EU was 46.66 billion US dollars, down 0.3% year-on-year; The total value of imports to Asian countries was US $100.8 billion, also down 13.3% year-on-year, of which only Japan rose 5.7% year-on-year to US $12.9 billion.

On the export side, slowing global demand, the renewed appreciation of the dollar and the fall in oil exports have hit the recovery in the value of US exports.

"The strengthening of the dollar since mid-April will put further downward pressure on exports, with fluctuations in the dollar affecting the trade balance with a lag," said Matthew Martin, an economist at Oxford Economics.

Exports of industrial supplies and materials, which mainly consist of crude oil and fuels, hit their lowest level in the past 16 months, which was the direct cause of the poor April export data.

There are structural changes in EU trade

Unlike the US, which has seen both exports and imports fall, the EU has returned to a trade surplus after weathering the energy crisis. But imports from the recession-hit EU market have shrunk further than exports have grown rapidly.

According to the March foreign trade data released by Eurostat on May 16, the total value of goods exports in the eurozone was 269.2 billion euros in the month, an increase of 7.5%. The value of goods imports was 243.6 billion euros, down 10% year-on-year; The trade surplus was 25.6 billion euros, an improvement from a deficit of 20 billion euros in the same period last year.

It is worth noting that compared with the United States, which has contracted its trade with major economies, the European Union's international trade has undergone structural changes.

In terms of imports, from January to March, the value of EU imports to the United States rose 15.1% year-on-year to 87.9 billion euros, the value of imports to Japan rose 13% year-on-year to 18.2 billion euros, and the value of imports to South Korea rose 11.9% year-on-year to 18.1 billion euros.

Among the major trading partners, only China and Russia saw a sharp decline in imports, with the EU's imports from Russia plunging 72.1% year-on-year to 18.1 billion euros, and Russia becoming the EU's ninth largest trading partner from the third.

Eu imports from China also fell 10.6% year on year to 132.1 billion euros, but China remains the EU's largest importer of goods.

In terms of exports, from January to March, EU exports to all major economies showed rapid growth, with the only exceptions being Japan and China. The value of EU exports to China and Japan edged up 2.9 per cent and down 10.3 per cent respectively.

Compared with China's stable position in the EU's import trade structure, the United States occupies an absolute advantage in the EU's export structure.

The structural change of EU's foreign trade is also clearly reflected in the trade balance data of Germany, China's largest trading partner within the EU.

According to China's General Administration of Customs, the value of China-Germany trade between January and May fell 6.1% from a year earlier to $87.8 billion. The value of China's exports to Germany fell 8.3% year on year to $43.2 billion. The value of imports to Germany fell 3.9 per cent year on year to $44.6 billion.

On June 5, according to the April foreign trade data released by the German Federal Statistics Office, German exports increased by 1.5% year-on-year to 130.4 billion euros in the month, imports fell by 10.3% year-on-year to 112 billion euros, and the trade surplus continued to expand.

When it comes to major economies, excluding EU members, China still ranks first with ㈠1.4 billion in trade, but the gap between that figure and the ㈠1.1 billion trade between the United States and Germany is tiny.

It also means that the United States is likely to overtake China as Germany's largest trading partner this year, after seven consecutive years in which China was Germany's most important trading partner.

The weak global economy and weak consumption have led to falling exports in countries including South Korea, Vietnam and India. Among them, Vietnam's imports and exports fell 18.4% in May, exports fell 11% in the first May, and South Korea's exports fell 15.2% in May.

However, it is worth noting that China's automobile exports are constantly increasing, especially new energy vehicles have become a major exporter in the world.

The National Economic Research Center of Peking University believes that with the continuous development of stable economic policies, import demand may recover.

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