- China’s exports in May blew past estimates, rising 7.6% year-over-year in dollar terms.
- It showcases Beijing’s growing dependence on foreign buyers to support its growth.
- But as cheap products flood the US and EU, Western leaders are responding with trade barriers.
Chinese exports jumped above forecasts in May, as the second-largest economy is leaning more and more on foreign markets to boost growth.
But as Beijing unloads its products on the world, it’s turning up the heat on trade tensions.
In dollar terms, exports rose 7.6% year-over-year, surpassing 6% estimates among economists polled by Reuters. According to customs data from Friday, that’s the second month of accelerated growth.
At the same time, import data was lackluster, and withdrawn Chinese consumption has been a headwind so persistent that China is the sole country undergoing deflation.
For an economy increasingly needing alternatives to domestic consumers, Beijing is pinning its hopes for economic growth on foreign buyers. Friday’s data suggests that technology products are boosting China’s exports, resulting from the country’s growing emphasis on advanced manufacturing.
That’s not a welcome development for international competitors, however. With Chinese tech and green energy goods sweeping foreign producers away, both the US and European Union have responded with trade barriers.
Last month, President Joe Biden announced fresh tariffs against Beijing’s advanced products, including quadrupling the duties on Chinese electric vehicles. Last week, tariffs resumed on Chinese-made solar panels coming through Southeast Asia after a brief moratorium.
Meanwhile, Republican candidate Donald Trump has pledged even steeper protectionist policies, vowing to apply 60% tariffs on Chinese goods.
Whichever US presidential candidate is elected in November, analysts have been warning that China’s dependence on international markets is sure to spark a trade war. This could happen as soon as next year, China Beige Book CEO Leland Miller forecast.
Although one already took place prior to the pandemic, Beijing’s manufacturing output has only grown since — it can no longer lean on smaller countries to absorb its product, a Capital Economics note said in March.
“China’s exporters are probably more reliant now on US consumers than they were when the trade war began during Donald Trump’s first term,” group chief economist Neil Shearing then wrote.
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