China's explosive export growth could make trade tensions with America even worse
- China's exports in May blew past estimates, rising 7.6% year over year in dollar terms.
- It showcases Beijing's growing dependence on foreign buyers to support its growth.
Chinese exports jumped above forecasts in May as the second-largest economy leans more and more on foreign markets to boost growth.
But as Beijing unloads its products on the world, it's turning up the heat on trade tensions.
In dollar terms, exports rose 7.6% year over year, surpassing 6% estimates among economists polled by Reuters. According to customs data from Friday, that's the second month of accelerated growth.
At the same time, import data was lackluster, and withdrawn Chinese consumption has been a headwind so persistent that China is the sole country undergoing deflation.
For an economy increasingly needing alternatives to domestic consumers, Beijing is pinning its hopes for economic growth on foreign buyers. Friday's data suggests that technology products are boosting China's exports, resulting from the country's growing emphasis on advanced manufacturing.
That's not a welcome development for international competitors, however. With Chinese tech and green energy goods sweeping foreign producers away, both the US and European Union have responded with trade barriers.
Last month, President Joe Biden announced fresh tariffs against Beijing's advanced products, including quadrupling the duties on Chinese electric vehicles. Last week, tariffs resumed on Chinese-made solar panels coming through Southeast Asia after a brief moratorium.
As the Republican candidate, Donald Trump has meanwhile pledged even steeper protectionist policies, vowing to apply 60% tariffs on Chinese goods.
Analysts have been warning that no matter which US presidential candidate is elected in November, China's dependence on international markets is sure to spark a trade war. This could happen as soon as next year, China Beige Book CEO Leland Miller said.
Although one already took place prior to the pandemic, Beijing's manufacturing output has only grown since — a Capital Economics note said in March that China could no longer lean on smaller countries to absorb its product.
"China's exporters are probably more reliant now on US consumers than they were when the trade war began during Donald Trump's first term," the group chief economist, Neil Shearing, wrote.