China's Exports to US Plummet 35% in May, as trade Talks are due to start.

Beijing: China’s exports to the United States plunged by 35% in May compared to the same month last year, according to newly released customs data, intensifying pressure on the world's second-largest economy. The sharp decline comes just as fresh trade negotiations between Beijing and Washington were set to resume in London later Monday.

Despite the sharp drop in US-bound shipments, China’s overall exports still managed a 4.8% year-on-year increase in May, though that marked a slowdown from the 8.1% growth seen in April. Meanwhile, imports fell 3.4%, resulting in a trade surplus of $103.2 billion for the month.

China’s exports to the US totaled $28.8 billion in May, a steep decline from $44 billion a year ago. Imports from the US also dropped, amounting to $10.8 billion. Still, robust trade with other global partners helped buoy China’s overall export performance.

Exports to Southeast Asia and the European Union showed solid growth, rising 14.8% and 12% respectively. Particularly strong gains were reported in exports to Thailand, Vietnam, Indonesia, and Germany.
“The rise in shipments to emerging markets has helped cushion China’s export sector from the worst effects of the ongoing trade conflict with the US,” said Lynne Song of ING Economics.

Analysts believe that earlier rush orders by companies trying to beat tariff deadlines supported trade volumes temporarily. Zichun Huang of Capital Economics noted that a temporary 90-day suspension of some tariffs might help boost exports in June, but warned that long-term prospects remain weak.
“Even with the short-term truce, Chinese manufacturers face sustained pressure from high tariffs and limited room for market share expansion globally. We expect export growth to weaken further by the end of the year,” Huang added.

While the temporary easing of trade barriers may offer brief relief, diplomatic frictions remain high. Disputes over semiconductors, critical minerals like rare earths, and student visa restrictions continue to strain US-China relations.

In a recent development, US President Donald Trump claimed that Chinese President Xi Jinping agreed to resume exports of rare earth minerals and magnets to the US—critical components for various American industries. However, Chinese authorities have yet to confirm the move. Interestingly, customs data show that while the volume of rare earth exports rose by 2.3% from January to May, their value fell sharply by nearly 21%, indicating a significant price drop.

Other export categories, including ceramics, footwear, and cell phones, are also seeing lower revenues amid weakening global demand and falling prices.

Internally, China's economic indicators reflect the strain. Domestic consumption remains soft, with consumer prices falling 0.1% in May, signaling weak demand. Producer prices dropped 3.3%—the steepest decline in nearly two years—worsening from a 2.7% fall in April.

The trade and price data highlight the growing challenges facing the Chinese economy, even as it seeks to navigate complex geopolitical and economic headwinds.