China’s Exports Beat Forecasts as EU and ASEAN Gains Offset US Decline

China’s export performance surpassed expectations in July, as robust shipments to the European Union and Southeast Asia compensated for a sharp drop in goods bound for the United States, according to official data released on Thursday.

These figures arrive amid a delicate trade ceasefire between Beijing and Washington, offering some much-needed reassurance to Chinese policymakers working to invigorate a domestic economy hampered by sluggish consumption and structural weaknesses.

Trade Data – July 2025

A Mixed Global Picture

While overall exports climbed by 7.2 percent year-on-year, a marked improvement over June and comfortably ahead of the 5.6 percent predicted by economists surveyed by Bloomberg, the performance was not uniformly positive. Exports to the United States tumbled by 21.7 percent, as residual tariffs imposed under Donald Trump’s trade agenda continue to weigh on bilateral trade.

By contrast, exports to the European Union rose by 9.2 percent, and shipments to the Association of Southeast Asian Nations (ASEAN) surged by 16.6 percent, underscoring the depth of regional integration in Asia’s supply chains.

“Exports supported the economy strongly so far this year,” said Zhiwei Zhang, President and Chief Economist at Pinpoint Asset Management.
“However, export growth may slow in the coming months, as front-loading due to US tariffs fades away.”

US-China Trade Truce and Ongoing Negotiations

Trade tensions remain a major factor shaping China’s external outlook. Despite a tentative 90-day truce agreed in May, followed by an agreement in Stockholm last month to extend negotiations beyond the 12 August deadline, the outlook remains uncertain.

Under the current truce:

• US tariffs on Chinese goods are capped at 30%
• Chinese tariffs on US goods stand at 10%

Further decisions on extending or altering these measures rest with President Donald Trump, as confirmed by US Trade Representative Jamieson Greer following the Stockholm meetings.

Meanwhile, new tariffs took effect Thursday on multiple trading partners, including a 35% tariff on Canadian goods, as Washington continues to reorient global trade in favour of US domestic industries.

Rare Earths and Strategic Concerns

Beijing’s dominance in the rare earths sector—vital for electronics, green technologies, and defence—has become a key flashpoint in US-China relations. Recent Chinese restrictions on exports have triggered alarm in American manufacturing sectors.

July data indicated a moderate retreat in Chinese rare earth exports from June’s spike, although volumes remain elevated by historical standards.

Domestic Economy: Import Growth Offers a Glimmer

In a surprising twist, imports grew by 4.1 percent year-on-year, defying expectations of a 1 percent decline. This has provided a tentative signal of stabilisation in domestic demand, though analysts urge caution.

“Import growth surprised in July,” noted Zichun Huang, China Economist at Capital Economics.
“However, this may reflect inventory building in certain commodities rather than a broader recovery in consumer demand.

Structural Challenges Remain

Despite the trade figures, China continues to grapple with fundamental economic headwinds:

• Factory output shrank for the fourth consecutive month in July
• Youth unemployment remains elevated
• Consumption remains subdued
• The property sector is still burdened by debt

Beijing has set a modest annual growth target of 5 percent, but achieving it will depend heavily on trade resilience and domestic policy response.

As analysts forecast greater hurdles for Chinese trade in the second half of the year, all eyes are now on the next round of US-China trade talks — and whether a longer-term truce or fresh escalation lies ahead.