The economic situation in China remains tense. In May, China’s exports grew by 4.8 percent year-on-year, narrowly missing its target of five percent. This was reported by Asia Nikkei.
Exports to the US fell sharply by 34.5 percent in May compared to the previous year – despite the deal with the US to suspend tariffs for 90 days. Imports of US goods fell by 18.1 percent. Exports to Europe and ASEAN countries, on the other hand, increased by more than ten percent each in May.
According to Zhang Zhiwei, President and Chief Economist at Pinpoint Asset Management, the export outlook remains very uncertain. Many Chinese traders frontloaded exports after the tariffs were announced, which also supported the figures in June. However, he expects momentum to fade in the coming months.
The Chinese consumer price index (CPI) also showed a year-on-year decline of 0.1 percent in May – a clear indication of weak domestic demand and the need to sustain the export sector. The struggling real estate market and concerns about the labor market dampened consumer confidence. The trade conflict with the US has also had a negative impact on consumption. As a result, many companies are unable to raise prices – instead, they are engaged in a price war that is putting profit margins under severe pressure. Emily Kossak