China Posts Bigger-Than-Expected Trade Surplus in May Amid Weak Imports

China recorded a stronger-than-expected trade surplus in May, reaching $103.22 billion, surpassing forecasts of $101.10 billion and April’s $96.18 billion. The growth was driven by steady exports and a sharp drop in imports, reflecting ongoing domestic weakness and global trade tensions.

Exports rose 4.8% year-on-year, missing expectations of 5% and easing from April’s 8.1% gain. U.S. demand remained pressured by elevated tariffs, though shipments to other global markets stayed robust due to China’s key supply chain role. A recent easing in tariffs—cut to 30% from 145% by the U.S. and to 10% from 125% by China—offered some relief, with exports to the U.S. showing marginal improvement.

Imports, however, declined more than forecast, falling 3.4% year-on-year versus an expected 0.9% drop and deepening April’s 0.2% slide. The sharp contraction highlights weak domestic demand amid ongoing economic uncertainty, sluggish consumer sentiment, and cautious business spending. These trends continue to fuel China’s disinflationary pressures, as also reflected in recent inflation data showing subdued consumer activity.

High-level U.S.–China trade talks are set to resume in London later Monday, following weeks of stalled negotiations. While both sides agreed to temporarily reduce tariffs in May, tensions remain high. The U.S. has criticized China’s chipmaking industry and export controls on rare earth minerals, while Beijing pushes back against tightening U.S. tech restrictions.

Despite short-term relief from tariff adjustments, ongoing geopolitical frictions and internal economic challenges suggest China's trade dynamics will remain volatile. Investors are closely watching whether this surplus trend continues amid broader global headwinds and muted domestic recovery signals.