In May, China’s exports contracted due to the weak recovery of its economy, but trade with Russia reached its highest level since the beginning of the invasion of Ukraine. According to data released by the customs services, Chinese exports declined by 7.5% year-on-year last month, while imports fell by 4.5%. However, in contrast to this general trend, trade with Russia reached its highest level since the start of the war in Ukraine.
Trade between China and Russia in May amounted to $20.5 billion, with a balance in Russia’s favor. The data also revealed a significant 75.6% increase in Chinese exports to Russia, the biggest jump since the invasion of Ukraine. China is Russia’s largest trading partner, and its presidents, Xi Jinping and Vladimir Putin, have advocated increasing bilateral trade to $200 billion by 2023.
Despite this robust trade relationship with Russia, China faces difficulties on other fronts. International demand for Chinese products has weakened due to the threat of recession in the United States and Europe combined with rising inflation. China’s reliance on European and US industry for the assembly of its products has been negatively affected by inflation and rising interest rates in these regions, which has weakened demand.
With the exception of March and April, China’s exports have experienced a negative trend since October 2022, when pandemic restrictions severely affected the country’s economy. Although economic activity showed signs of recovery in the first quarter of 2023, driven by the easing of restrictions, the Chinese economy is weighed down by an indebted real estate sector, a lack of consumer confidence, and the global slowdown.
To stimulate the economy, China is expected to implement a new stimulus plan for the real estate sector and cut interest rates. This is intended to support the economic recovery against a backdrop of internal and external challenges.