China’s export growth slowed to a three-month low in May as US tariffs took a toll, deepening deflationary pressures on the world’s second-largest economy. Factory-gate deflation worsened to its worst level in almost two years, putting pressure on domestic and external fronts.
Exports to the US dropped 34.5% year-on-year in value terms, the sharpest decline since February 2020, when the COVID-19 pandemic upended global trade. Total exports from China expanded 4.8% year-on-year, slowing from the previous month’s 8.1% growth.
Imports also declined, dropping 3.4% year-on-year, deepening from April’s 0.2% decline. Exports surged 12.4% year-on-year and 8.1% in March and April, respectively, as factories rushed shipments to the US and other overseas manufacturers.
China’s trade surplus widened to $103.22 billion, but markets showed muted reactions to the data. The blue-chip CSI300 Index climbed 0.29%, while the benchmark Shanghai Composite Index rose 0.43%.
Deflationary pressures worsened last month, with the producer price index falling 3.3% from a year earlier. Cooling factory activity highlights the impact of US tariffs on China’s manufacturing hub.
China’s economy has struggled to mount a robust post-pandemic recovery amid a prolonged property slump and has relied on exports to underpin growth. Businesses have adapted to falling prices, with US coffee chain Starbucks announcing price cuts for some iced drinks in China.
The slowdown in export growth is expected to partially reverse this month, but shipments will be knocked again by year-end due to elevated tariff levels, according to economists.
Source: https://www.reuters.com/world/china/chinas-may-exports-slow-deflation-deepens-tariffs-bite-2025-06-09