Trade war impact: China disappoints with trade and inflation data

Economic data released on Monday cast further doubt on the strength of China’s economic recovery. May figures for the country’s trade balance and inflation came in below expectations, amid ongoing tensions with the United States—even during what appears to be a temporary trade truce.

One of the most striking figures was the 34.5% year-on-year plunge in Chinese exports to the US, which totaled US$28.8 billion. It marked the steepest drop since February 2020 and deepened April’s contraction, when exports to the US had already fallen by 21%. Imports from the US also declined sharply, down 18% year-on-year.

On the domestic front, inflation data painted a similarly subdued picture. The Consumer Price Index (CPI) slipped 0.1% year-on-year in May, marking China’s fourth consecutive month of deflation. Although the figure met expectations, it underscores the ongoing weakness in domestic demand.

The impact of these developments will likely become clearer in the months ahead, especially if talks between Beijing and Washington in London succeed in establishing a roadmap that brings greater certainty to markets and global supply chains, according to Ámbito.com.