China’s exports rose in May at the fastest pace in more than a year, the government said on Friday, as a flood of appliances, cars and electronics left factories and the prospect of a global backlash grew.
The value of China’s exports rose 7.6 percent compared to May 2023, even as prices for many manufactured goods leaving China are falling.
China is rapidly building new factories and expanding existing ones as part of a national strategy. But spending by Chinese households is weak, due to a prolonged and steepening decline in their apartment prices.
Much of the additional factory production is exported. For example, fewer and fewer Chinese families are buying new apartments and fewer appliances are sold in the country. The government said the value of home appliance exports rose 18.3 percent in May compared with the same month a year earlier. And because demand is so weak in China, appliance prices have fallen. The actual number of home appliances exported last month increased by 27.8 percent.
China’s trade surplus, the difference between what it earns selling goods to the world and what it spends on imports, expanded in May to $82.6 billion. That was 25.6 percent more than the previous year. It was the highest in May and one of the highest months in history, except during the pandemic, when China exported huge quantities of medical equipment, exercise equipment and other manufactured goods.
China’s trade surplus has tended to be quite low in May and much larger later in the year, when its exporters supply goods for the holiday season.
The quantity of many exports, not just household appliances, has increased faster than their value. There are so many containers full of goods leaving China and fewer returning with imports, that shipping lines are running out of containers in China.
The value of China’s imports increased only 1.8 percent in May.
Chinese companies are starting to face more trade barriers. President Biden raised tariffs on May 14 on about 4 percent of China’s exports to the United States. The European Union is expected to decide next week whether to impose tariffs on electric car exports from China. Developing countries such as Brazil and India are also taking steps to protect their factories and industrial workers from Chinese competition.
China said on Friday that the value of truck and car exports rose 16.3 percent in May from a year earlier. The breakdown between gasoline cars, electric cars and diesel trucks is usually released at the end of the month.
The increase in tariffs does not appear to have caused much damage yet to China’s exports, and could even help in the short term. Some Chinese companies have rushed to ship products to emerging markets in Latin America and elsewhere before the tariffs take effect.
Last year, China increased exports to Vietnam and Mexico, where products can be reprocessed and then shipped to the United States or Europe with low or no tariffs. These more complicated trade routes, along with China’s weak exchange rate, may reduce the effectiveness of tariffs, said Capital Economics, a research firm.
“Even once tariffs are in place, their impact could be mitigated through trade diversions and exchange rate adjustments,” the firm said in a research note.
China’s growing surpluses are helping to offset a weak domestic economy.
Chinese consumers’ reluctance to spend is easily visible on the streets of Shanghai and Beijing. Many restaurants in Shanghai and Beijing are empty even on weekend nights. The stores have few or no customers and the merchants stand there looking bored. Low-priced cosmetics made in China are displacing more expensive foreign brands, and sales of spirits have faltered as consumers buy beer.
The United States reported this week that its trade deficit had widened significantly in April to $74.6 billion. JP Morgan said in a research note that the country’s trade deficit would likely hurt its economic growth this spring, wiping almost a full percentage point off the April-June growth rate. The US economy grew at an annual rate of 1.3 percent in the first three months of this year.
Li you contributed to the research.