World trade: Customs dispute: China’s trade with the USA is clearly collapsing

China’s trade with the United States has massively collapsed in view of the disputes of the two world’s largest economies. As the customs authority of the customs authority in Beijing emerged, exports and imports sank, as in April. In May, exports in US dollars were calculated by 34.5 percent, while imports lost 18.1 percent compared to May 2024.

In mid -May, both sides had agreed on a break in the previously escalated customs dispute and significantly reduction of the serves on goods from the other country. Today, representatives of both states in London want to continue to speak about trade questions.

However, some problems are still in the room, such as Beijing’s export controls on the export of rare earths and magnets that are important for industry, for which China is the main processor worldwide. The United States restricted the sale of top technology such as design software for computer chips or important components for aviation where China depends on abroad.

How China’s economy was overall

In April, China’s foreign trade clearly exceeded the expectations of many observers. The assumption was that the People’s Republic was particularly able to increase its goods to other countries.

Overall, China’s foreign trade was able to grow again in May. The exports increased by 4.8 percent compared to the same month of the previous year. In contrast, imports dropped by 3.4 percent. The surplus was around $ 103 billion (around 90 billion euros).

The latest numbers narrowly missed the expectations of analysts. In advance, these had expected an increase in exports by about five percent and a slight decline in imports.

What the numbers mean for German companies

Because of the trade conflict, Chinese exporters could no longer count on the United States. But there were other paths and buyers from the Far East. As in April, China’s exports to the Federal Republic shot by 21.5 percent in May, while imports from Germany decreased by 1.3 percent.

The lesson decline illustrates the weak domestic demand and exacerbates the already difficult economic conditions for German companies in China, said Maximilian Butek, executive board member of the German Chamber of Commerce (AHK) in China for Ostkina.

German industry is also concerned about Beijing’s export controls on rare earths. “The situation is serious: Affected German companies are waiting for urgently needed export licenses for rare earths and magnets,” said Butek. According to him, AHK members report occasionally about granted permits. But a quick process is now needed to prevent production stamps, Butek demanded.

What China’s economy is worried about

The People’s Republic continues to experience a weak demand in Germany. This is also shown by the steadily falling imports. So far, Beijing’s industrial policy led to a significantly more produced in certain industries than the market was able to accommodate. Therefore, many goods can be exported at cheap prices. One example is the solar industry.

The fact that people in China consume too little is also due to the consequences of the severe real estate crisis. Many people invested in apartments that are worth less because of the sunken prices, which presses on the consumption mood. In addition, the weakness in the industry, which is otherwise important for the economy, is burdening companies and local governments.

Deflation pressure is also a problem for China’s economy. As the statistics office announced today, consumer prices were 0.1 percent lower than a year earlier in May. Deflation, i.e. the opposite of inflation, gives consumers stable prices at the cash register, but presses the profits of companies in the long term, which can subsequently lead to wage cuts or job losses.