INTERNATIONAL TRADE: China Exports To Vietnam Continue Surge Despite Levy Fears

Latest China international trade data for July showed solid nominal export growth despite further heavy declines in shipments to the US at least on Y/Y terms. China exports to the US point to some stabilization in trade after May lows (although with further questions on differences between US accounting) whilst exports to Vietnam remain particularly strong in signs that fears over transshipment levies didn’t have an immediate impact. 

• As noted overnight, China trade flows were stronger than expected in July as exports increased 7.2% Y/Y (cons 5.6) after 5.9% and imports rose 4.1% Y/Y (cons -1.0) after 1.1%.
• Export strength is being driven by Vietnam in particular at 28% Y/Y (25% 3mma), suggesting little impact at least immediately from fears of transshipments facing a 40% rather than 20% tariff rate under the US-Vietnam trade deal announced earlier in the month.
• It is admittedly early for any impact to show, especially seeing as Reuters today reported that “Tougher U.S. trade penalties on goods originating in one country being re-shipped from another are not expected to immediately follow new U.S. tariffs, three people in Southeast Asia with knowledge of the matter said, easing a major cause of concern.”
• Separate Vietnamese trade data shows trade from China to the US via Vietnam has been underway for some years but ramped up at the start of the second Trump administration in data up to June.
• Back to today’s China data, export growth to ASEAN countries more generally remains strong at 16.8% Y/Y (16% 3mma).
• Elsewhere, exports to the EU are still robust (9.3% y/y, 10% 3mma) with the latter suggesting similar rather than accelerated disinflationary pressures amidst European concerns of re-routing of excess supply.
• Exports to the US meanwhile continued to fall heavily, -21.6% Y/Y in July (-24% 3mma), and imports are declining almost as quickly at -18.6% Y/Y (-17% 3mma) as trade between the two remains constrained.
• In level terms, China exports to the US in non-seasonally adjusted terms at $36bn in July dipped from $38bn in June but were off the May low ($28bn). It compares to the $45.5bn of July 2024 which was broadly representative of the year as a whole when it averaged $43.7bn in 2024.
• There are increasing question marks when comparing with the US side of trade data, where US quoted imports from China have fallen more notably in data up to June (released Tue) to a seasonally adjusted $19.4bn vs $37bn averaged in 2024.