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China's shift in trade: US imports plummet as EU demand grows

Despite the trade truce reached in October between Xi Jinping and Donald Trump, Chinese exports to the US continued to plunge sharply in November. Shipments decreased by 28.6% year-on-year, marking the eighth consecutive month of double-digit declines, according to CNBC. American imports into China also fell by 19%, underscoring the ongoing cooling of bilateral trade.

However, the overall picture of China’s external trade balance looks significantly better. Total exports in November increased by 5.9%, exceeding forecasts of 3.8% and sharply rebounding after an October decline. Losses in the American market are being offset by growth in other regions: exports to the EU rose by almost 15%, while shipments to ASEAN countries increased by more than 8%.

Economists note that the formal truce has done little to change the reality: the weighted average tariffs imposed by the US on Chinese goods remain around 47.5%. Natixis economist Gary Ng reports that Chinese exporters are increasingly using third countries for re-exporting goods to the US—a scheme that could become the new normal in global trade.

Imports into China grew only by 1.9%, falling short of the expected 3%. The weakness in domestic demand continues to be attributed to the prolonged crisis in the real estate market and household caution. Against this backdrop, the country's trade surplus for the first 11 months rose by 21.6%, reaching a record $1.076 trillion.

Progress on implementing the trade deal remains slow. Soybean imports increased by 13% year-on-year but declined compared to October, raising questions about Beijing's ability to fulfill its commitment to purchase 12 million tons of American soybeans by the end of the year.

In late December, China will hold its annual economic meeting. Goldman Sachs anticipates that Beijing will maintain its GDP growth target of around 5% for 2026. However, achieving this target will likely require authorities to expand the budget deficit and lower interest rates early next year to compensate for weak domestic demand.

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