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10 Jun 2024

Econ Digest

Chinese exports surged in May 2024 and are expected to continue accelerating in the next 1-2 months before a new round of US tariff increases on Chinese products takes effect in August 2024

คะแนนเฉลี่ย
  • The low base effect supported China’s exports in May 2024, with export growth reaching 7.6%YoY, surpassing market expectations and the 1.5% growth seen in April 2024. High-tech related products led the increase, expanding by 11.7%YoY while exports to the ASEAN countries increased 25.4%. Exports to the US rebounded to 4.8% YoY growth, up from -1.0%YoY during the first 4 months of 2024. However, China’s exports to Europe contracted by 0.7%YoY in May 2024.
  • During the next 1-2 months, China’s exports to the US may accelerate further before the US raises tariffs on Chinese goods, starting from August 2024 onwards. After the US announcement of such new tariffs, the Shanghai Containerized Freight Index or SCFI, which measures the weighted average freight rates from Shanghai to 13 global ports, increased by 26.34% to 3,184.87 on June 7, 2024, up from 2,305.79 on May 10, 2024. This surge may be caused by accelerated imports of Chinese products by the US and the Red Sea issues. However, the acceleration of export value is limited as the value of imported goods subject to US tariffs is approximately USD18 billion, accounting for only 5.6% of the total value of the US imports from China.
  • In the second half of 2024, China’s exports are expected to show a slowdown due to:
  1. Global trade momentum is showing signs of a slowdown, the value of global exports in March 2024 decreased while the global manufacturing PMI showed signs of a slowdown in April 2024. Additionally, the International Monetary Fund (IMF) has lowered its global trade growth forecast for 2024 to 3.0% from 3.3%.
  2. Exports to the US, especially products subject to increased tariffs such as lithium-ion batteries and solar cells, will tend to slow down after having accelerated before August 2024.
  3. The implementation of EU tariffs on electric vehicles (EVs) may result in a slowdown in China’s EV exports to Europe. Europe is an important market for China’s EV exports, accounting for approximately 40% of China’s total EV exports in 2024. Starting from July 2024, the EU is expected to impose preliminary tariffs on Chinese-made EVs (prior to announcing the conclusion of the EU’s anti-subsidy investigation on China’s EVs in November 2024). Attention should be paid to the announcement of temporary tax rates after June 9, 2024.
  4. Risk of additional tariffs imposed by the US on China’s imports, as a campaign tactic before the US presidential election in November 2024.
  • However, China has adapted to counter trade barriers. The structure of China’s exports has shown signs of change, resulting from exports through third-party countries to reduce the impact of barrier measures such as tariffs. This is reflected in the declining proportion of China’s direct exports to the US, while the proportion of China’s exports to Mexico has increased. This trend aligns with the figures in 2023, where the value of US imports from Mexico exceeded imports from China.
  • KResearch projects that China’s exports in 2024 will recover within a limited range due to the low comparison base last year. Meanwhile, the impact from the trade war will be offset by accelerated imports before the US tariff measure takes effect in the second half of 2024. The Bloomberg Consensus expects China’s exports in 2024 to grow by 3.5%. 

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