Beijing, China — Recent customs statistics reveal a significant decline in China’s exports to the United States, which fell by 35% in May compared to the same month last year. This downturn presents further challenges for China’s economy as officials prepare for a new round of trade negotiations with American representatives in London.

China’s total exports climbed by 4.8% in May, a decrease from April’s 8.1% increase. Meanwhile, imports dropped by 3.4%, resulting in a trade surplus of $103.2 billion. Specifically, exports to the U.S. amounted to $28.8 billion, down from $44 billion in May 2022, while imports from the U.S. fell to $10.8 billion during the same period.

Despite the slump in U.S. trade, exports to other regions showed resilience. Shipments to Southeast Asia and the European Union grew by 14.8% and 12%, respectively, with Thailand, Vietnam, and Indonesia experiencing notable increases. Exports to Germany also saw a robust rise of more than 12%.

Analysts suggest the strengthening exports to alternative markets have helped stabilize China’s overall export performance amid ongoing trade tensions. “The rise in exports to other economies has allowed China to maintain a relatively strong export position despite the trade conflict,” remarked Lynne Song, an economist at ING.

Several businesses had rushed to place orders earlier this year to avoid anticipated tariff increases. As those new tariffs took effect, a slowdown in exports followed. Looking ahead, Zichun Huang from Capital Economics forecasts a possible recovery in June, driven by a temporary suspension of tariffs applied between the two nations.

However, Huang cautioned that sustaining robust export growth will become increasingly difficult as tariffs remain high and manufacturers face challenges in maintaining their market share globally. He predicts a further slowdown in export growth by the end of the year.

Even as trade relations see a temporary truce, tensions persist between Beijing and Washington. Recent disputes have centered on advanced semiconductors, critical minerals, and the status of Chinese students in U.S. universities.

Negotiations taking place in London follow a recent conversation between President Trump and Chinese President Xi Jinping, although it is uncertain whether this dialogue will translate into tangible outcomes.

During their discussions, Trump asserted that Xi had agreed to resume exports of rare earth minerals to the U.S., which are essential for various American manufacturing sectors. Yet there has been no immediate confirmation from Chinese officials regarding this agreement. Data released on the same day highlighted a 21% decrease in the value of China’s rare earth exports between January and May compared to the previous year, despite a slight increase in volume.

This trend mirrors other sectors, where diminishing global demand has led to price drops for various products, including consumer goods and technology items. The pressure on China’s economy is evident, with sluggish import activity and weakened domestic consumption resulting from lower consumer demand. The government reported a 0.1% decline in consumer prices in May, influenced largely by falling food prices.

Producer prices experienced an even steeper contraction, falling by 3.3% in May, marking the lowest level in nearly two years. The declines in price signals are indicative of broader economic concerns facing China as it navigates through a complicated global trade landscape.