China’s exports rise in May but US trade war will still hurt in the long run, analysts warn

Exports unexpectedly rose 1.1 per cent in May against an expected drop of 3.9 per cent, although imports fell 8.5 per cent

US President Donald Trump increased tariffs on US$200 billion of Chinese imports from 10 per cent to 25 per cent on May 10

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US Treasury secretary Steven Mnuchin with People's Bank of China governor Yi Gang in Japan. Photo: Bloomberg

Published: 12:45pm, 10 Jun 2019Updated: 11:41pm, 10 Jun 2019

Chinese exports rebounded slightly in May as companies front-loaded their shipments to beat last month’s US tariff increase, but analysts warned that the damage from the move by US President Donald Trump could soon pose a severe challenge to the world’s second largest economy.

Goods sold overseas rose 1.1 per cent in May from a year earlier, confounding market expectations of 3.9 per cent drop and improving from the 2.7 per cent fall a month earlier.

Imports, however, fell 8.5 per cent following a rise of 4 per cent a month earlier due to a plunge in shipments from the United States and also weakening domestic demand.

“The rise [in overall Chinese exports] last month was largely due to front-loading and that’s not sustainable. The downward trend will continue in the coming months,” said Larry Hu, chief China economist of Macquarie Capital. “The government may have to consider larger stimulus in the second half of this year, potentially the fourth quarter, when its impact on the economy will show up.”

The US tariff increase from 10 per cent to 25 per cent on US$200 billion of Chinese imports took effect May 10, meaning exporters had to fill orders early in the month to take advantage of the lower rate.