China exports to US fall most since 2020 despite trade truce
[BEIJING] Chinese exports rose less than expected last month as the worst drop in shipments to the US in more than five years counteracted strong demand from other markets.
Exports rose almost 5 per cent from a year ago to US$316 billion in May, slower than economists' forecast of 6 per cent growth. Despite record exports so far this year, the slump in US demand may have been one factor in convincing Beijing to sit down with US President Donald Trump's trade negotiators in Geneva and agree to a tariff truce.
China's exports to the US fell 34.4 per cent, according to Bloomberg News calculations, the most since February 2020, when the first wave of the pandemic shut down the Chinese economy. That was despite the agreement reached on May 12 that gave temporary relief to imports from China that would have faced as much as 145 per cent duties.
That sharp decline offset a 11 per cent rise in exports to other countries, showing the heft of the world's largest economy even as Beijing reduced its reliance on direct shipments to the market after Trump's first term.
The benchmark CSI 300 Index for onshore stocks pared gains after the release and was up 0.2 per cent at the lunch break.
'The trade outlook remains highly uncertain at this stage,' said Zhiwei Zhang, chief economist at Pinpoint Asset Management. He added that frontloading should help sustain export momention in June but may fade in the coming months.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Shipments to Vietnam jumped 22 per cent, rising above US$17 billion for the third straight month as Chinese companies continued to ship through third countries to try to avoid US tariffs. However, that flow is pushing up the US trade deficit with Vietnam and other nations, further complicating negotiations with the US about their own tariffs.
The data showed a recovery in shipments of rare earth elements, which have become one of the key points of US-China contention.
Earlier this year China imposed an export license requirement on some of the elements and products such as magnets, radically slowing down shipments and forcing manufacturers globally to halt some production lines. Beijing's grip on these exports will be top of the agenda when trade negotiators meet in London for talks later on Monday (Jun 9).
Weak Chinese demand
Imports fell 3.4 per cent for a third straight month of declines, leaving a trade surplus of US$103 billion, according to official data released on Monday.
The weakness of the Chinese economy was underscored earlier with the release of inflation data showing the country continued to be in deflation in May. Factory prices fell for a 32nd straight month, while consumer prices also declined from last year.
Still, the overall growth in exports will continue to support the economy, with the record trade surplus of almost half a trillion US dollars so far in 2025 a boost to companies facing weak demand at home. In the second half of the year, however, China could face a drag on growth should risks to global trade materialise.
The US is threatening to raise tariffs on many countries from early July and on China from August. That could further slash demand for Chinese products destined directly for the US and also used as inputs into other nations' manufactured goods.
Even if China and other nations are able to strike a deal with the Trump administration, demand from the US and elsewhere might still weaken as companies slow down their frantic purchasing aimed at beating the tariffs. BLOOMBERG
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
25 minutes ago
- Business Times
Tencent Music to buy Chinese audio platform Ximalaya for US$2.4 billion
[BEIJING] Chinese music platform Tencent Music Entertainment Group said on Tuesday (Jun 10) it would buy long-form audio platform Ximalaya for about US$2.4 billion in cash and stock, expanding its library of content to attract more paying users. US-listed shares of Tencent rose 7 per cent in premarket trading. The company will offer US$1.26 billion in cash and Class A shares representing up to 5.20 per cent of its total outstanding stock. It will also issue shares to Ximalaya's founder investors not exceeding 0.37 per cent of its total share count. The stock component of the deal totals about US$1.15 billion based on Tencent Music's last closing price on April 24. Closely held Ximalaya counts Tencent, Baidu and Sony Group's music entertainment unit as backers. The company filed for a Hong Kong initial public offering in 2021, but pushed back the plan. The app-based online audio platform had 303 million monthly active users as of 2023, according to a separate listing application it filed last year. Tencent Music is one of the biggest online music entertainment platforms in China, with apps such as QQ Music, Kugou, Kuwo and WeSing, according to its website. REUTERS, BLOOMBERG


CNA
26 minutes ago
- CNA
Tariff war: US, Chinese officials meet in London for second round of trade negotiations
American and Chinese officials are meeting for a second day of trade talks in London to shore up a fragile truce over tariffs. Negotiations are expected to focus on Beijing's shipments of rare earths and Washington's restrictions on chip exports. US Commerce Secretary Howard Lutnick said discussions are going well, while US President Donald Trump has also expressed optimism. Tan Si Hui reports.
Business Times
44 minutes ago
- Business Times
Private-capital funds: Depressed distributions with no end in sight
AFTER a bacchanal of deal activity lasting into 2021, private-market participants are still nursing a hangover. Assets acquired at premium valuations at the market peak have been creating headaches for general partners (GPs), who must decide whether to hold out for buyers at current valuations or stomach write-downs for a shot at quick liquidity. Net asset value (NAV) is increasingly bottled up in old funds that should otherwise be liquidating. For now, it seems only top-shelf assets are finding buyers, while assets with weaker fundamentals are still on ice. In this column, we take a sober look at how private-capital markets are adjusting to a world of depressed distributions, with no exits in sight. Limited partners (LPs), hoping for an outpouring of liquidity in 2025, may instead want to brace themselves for another dry year. Recent vintages falling further behind Private-capital distributions remain subdued, extending a slowdown that began in the wake of 2021's exit boom. What once looked like a brief pause increasingly feels like a prolonged holding pattern and a test of patience for LPs. This slowdown is especially apparent in the divergence of the net-cash-flow paths between vintage cohorts. While cash flows for most historical vintages follow remarkably similar paths, recent vintages are drifting from the script. The traditional cadence of investment, ramp-up and harvest appears to be slipping out of rhythm. In some cases, as with the 2015-2017 vintages, this slowdown looks like mean reversion, dragging these vintages back down after a period of unusually strong liquidity – particularly in venture capital and buyout. In others, like the 2018-2020 vintages, the drop appears more acute, suggesting not just a return to historical norms but also a deeper pullback in realisations. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Structural shifts may be reinforcing the deviations from long-run averages. Strategy evolution in areas such as private credit, shifting exit dynamics in buyouts, and a valuation overhang in venture and real estate all suggest that today's market environment is markedly different from past cycles. Historical analogues are becoming less-reliable guides. But the message is clear: Recent vintages aren't just behind the curve – they're navigating a new course. Water everywhere, but not a drop to drink Across private-capital strategies, NAVs in old funds (those that have outlived the average liquidation age of their asset class) are at or near record levels, reaching US$250 billion in the fourth quarter of 2024, according to data from the MSCI Private Capital Universe. For LPs anticipating liquidity from their more mature private-equity (PE) commitments, some unwelcome news: This rise in late-life NAV is largely attributable to distribution rates, which have fallen to record lows, rather than to strong growth. PE distribution rates remain depressed, with specific implications for funds that are over the hill. The dearth of distributions is bottling up assets that were once reliable candidates for exits. This has meant fund lives that drag on longer than expected, and LPs are increasingly looking to more mature corners of their portfolios for liquidity. The same can't be said for private credit and private real estate. In the former, the self-liquidating nature of loans has stabilised distributions and kept NAVs in check through funds' golden years. For the latter, write-downs kept a lid on valuations coming out of 2020, even as transaction activity remained depressed. For PE distribution rates to revert to historical norms and old NAVs to run off, there are two options: one hopeful, one not. In the optimistic scenario, deal activity recovers and a wave of exits provides some much-needed liquidity. In the other, GPs come to believe that many of these long-held assets are overvalued and accept write-downs as the cost of winding down a fund, as we've seen in real estate. Tempering cash-flow expectations Across PE and private real estate, distribution rates are near historic lows, and recent market volatility may put cash flows under further pressure when we start to see data for 2025. Historically, prolonged downturns in public-equity markets have been reflected in private-capital distributions. The dotcom bust and 2008 global financial crisis both hit distributions hard; but in recent years, distributions have remained depressed despite a rebound in public equities. For LPs counting on distributions to fund capital calls from other private commitments, this combination of public-equity sell-offs and falling distribution rates presents a challenge: if forced to sell liquid assets to meet capital calls, it's likely to be when prices are down. Private credit, in contrast, has continued to distribute more or less apace, benefiting from elevated interest rates passing through to lenders. This cash-flow diversification may become an increasingly important benefit of private-credit allocations. Not everything is rosy in private credit, however. GPs are increasingly writing down loan values as borrowers struggle under the weight of persistently high interest rates and new-found uncertainty around the economy's trajectory. Valuation multiples in free fall may call for an Ebitda parachute Between 2022 and 2024, buyout exits were sold at lower median-valuation multiples than assets still held in portfolios – an inversion from historical norms – despite exhibiting stronger margin growth and lower leverage. In contrast, held assets, carried at higher multiples, are grappling with contracting profitability and rising leverage, raising questions about valuations and their paths to exit. These questions are amplified by the macro backdrop: sticky inflation risk, higher-for-longer interest rates and growth uncertainty that could tip into stagflation. Held assets confront these macro headwinds with little balance-sheet cushion, given their narrowing-since-entry margins and rising leverage. Over the past decade, exited assets have consistently exhibited stronger median Ebitda (earnings before interest, tax, depreciation, and amortisation) margin growth since their entry and more contained median net-debt-to-Ebitda ratios than held assets, which reflect GPs' tendency to prioritise exiting higher-performing assets. This selection trend proved especially relevant between 2022 and 2024, as exited assets' robust fundamentals cushioned the impact of falling valuations. In 2025, with multiples under pressure and rising macro uncertainty, strong fundamentals may be the last line of defence against deeper erosion in exit proceeds and more strain on LPs. Is the party over? Recent vintages of private-capital funds have plenty of ground to cover if they're going to catch up with their older peers' cash-flow patterns, and the surprising volatility in public markets of early 2025 is unlikely to help them close the gap. Returns for older private-equity funds have been flat, but more assets are accumulating in funds that are struggling to liquidate their holdings. GPs are preferentially exiting portfolio companies with strong fundamentals, leaving an unclear path for selling those remaining assets. LPs who were hoping for a rebound in transaction activity, and thus liquidity, in 2025 may need to adjust their plans. The writers are vice-presidents, MSCI Private Capital Research. Written with the assistance of Uday Karri, vice-president, and Daniel Hadley, senior associate.