China’s export growth lost momentum in May, rising 4.8% year-on-year, a sharp slowdown from the 8.1% surge recorded in April, as per the customs data released on Monday.The deceleration came amid a sharp drop in shipments to the United States, down 35% year-on-year, as tensions between the two economic giants continued to cloud trade prospects.The figures were released just hours ahead of another round of US-China trade negotiations scheduled for later in the day, in London. These talks come after a phone call between US President Donald Trump and Chinese President Xi Jinping last week. Zichun Huang of Capital Economics anticipated exports growth to revive in June, thanks to a 90-day suspension on most of the tariffs the two countries have imposed on each other.China’s imports also fell in May, down 3.4% year-on-year, leaving the country with a trade surplus of $103.2 billion. Exports to the US totalled $28.8 billion, a steep decline from $44 billion a year ago. Imports from the US also slid 7.4%, to $10.8 billion.The drop in US-bound shipments was offset to some extent by strong export growth to Southeast Asia and the European Union. Shipments to those regions rose 14.8% and 12% respectively, with notable gains in trade with Thailand, Vietnam, Indonesia and Germany.“The acceleration of exports to other economies has helped China’s exports to remain relatively buoyant in the face of the trade war,” said Lynne Song, an economist at ING, quoted by AFP.Analysts say many businesses had front-loaded orders earlier in the year to avoid tariffs, temporarily boosting numbers. But as those import duties began to take effect, exports slowed.Meanwhile, tensions between Washington and Beijing have extended beyond tariffs. Disagreements over high-tech semiconductors, critical rare earth minerals, and even student visas continue to drive a wedge between the two powers.President Trump told reporters on Air Force One on Friday that Xi had agreed to resume rare earth mineral exports to the US, an assertion yet to be confirmed by Chinese authorities. Customs data show the value of rare earth exports dropped nearly 21% in the first five months of the year, though volumes ticked up slightly by 2.3%.Domestically, Chinese markets are also suffering. Consumer prices fell 0.1% in May, while producer prices dropped 3.3%, the sharpest decline in nearly two years. As both sides prepare to sit down in London, hopes for a breakthrough remain cautious. While the tariff truce has bought time, the path to a durable resolution appears fraught with challenges far beyond customs duties.
