China export growth slows amid tariff anxiety

[WORLD] China’s latest export data lands with a thud for those banking on a clean trade-driven rebound. May’s weaker-than-expected growth, unfolding just as geopolitical rifts widen and fresh US tariff threats loom, hints at deeper instability ahead. The ripple effects could stretch far beyond China’s ports—disrupting global supply chains and rattling emerging markets still closely tied to Chinese demand. For financial markets, the muted performance raises questions about the durability of China’s rebound and the external headwinds facing its manufacturing sector.

Key Takeaways

• China’s exports in May grew 4.8% year-on-year, reaching US$316.1 billion, according to customs data.
• The growth rate slowed sharply from April’s 8.1% and missed the market consensus of 6.28%, based on Wind data.
• Some analysts point to strategic front-loading by Chinese exporters in May, a possible hedge against looming US tariff hikes.
• Washington’s renewed trade offensive—raising levies on Chinese EVs and floating broader restrictions—has reenergized bilateral tensions.
• Yet even with a softening yuan and fresh export incentives in play, the slowdown in outbound shipments exposes just how fragile China’s external demand really is.

Comparative Insight

China’s latest trade figures continue to diverge from the upbeat momentum seen across Southeast Asia. In markets like Vietnam and Malaysia, exports have staged a convincing rebound in 2024, powered by broader supply chain diversification and a growing push from Western firms to nearshore production.

Beijing’s export engine once served as a reliable post-crisis indicator—its dramatic recovery after the 2008 financial crash spurred a wave of regional demand for raw materials and industrial equipment. This time, however, the story is more complicated. Even with tailwinds like a depreciating yuan and stepped-up export incentives, the lukewarm numbers reflect a deeper shift: global sourcing is quietly but steadily drifting away from its traditional China hub.
Within China itself, the export performance diverges by sector. High-tech and EV-related exports—previously drivers of trade resilience—now face mounting regulatory and protectionist pressure abroad. Meanwhile, traditional manufacturing sectors remain exposed to weak Western consumer demand and sluggish global investment cycles. The result is a patchy and politically exposed export landscape.

What’s Next

Short term, the pressure on China’s exporters is likely to increase. The US and EU are actively reviewing trade defense measures against Chinese overcapacity in green technology, including solar panels and EVs. Should new tariffs take effect in Q3, exporters may rush to ship goods in June and July—creating a short-term spike that masks underlying weakness ahead of a likely drop-off.

In currency markets, the renminbi continues to face downward pressure. For now, resilient exports offer one of the few anchors. But if the yuan weakens too far, the narrative could shift—sparking accusations of deliberate devaluation to gain trade advantage.

Eyes will be on Beijing. Disappointing trade data could tip the balance toward fresh stimulus—whether through rate cuts, tax relief, or targeted credit flows aimed at propping up strategic sectors.

What It Means

May’s export figures throw a caution flag across global markets—China’s trade rebound is anything but self-sustaining. Growth remains in the black, but the deceleration—especially against the backdrop of mounting geopolitical tension—signals deeper uncertainty for investors and supply chain strategists alike. The mood among exporters suggests defensive positioning, not a surge in end-market demand.

For capital markets, this underscores a broader dilemma. Beijing may be aiming to project resilience abroad, but the room to maneuver is narrowing as external pressures build. Should trade hostilities deepen, policymakers may have little choice but to double down on domestic demand—a pivot that carries its own set of risks and limitations.

Those banking on a smooth, export-led recovery might want to rethink that thesis. As protectionism hardens and politics creep further into trade corridors, assumptions built on past cycles are starting to look increasingly fragile.