China’s Exports Surge, but US Tariffs Threaten Transshipments; Hang Seng Index Steadies

China’s Export Tactics Under Fire as US Tariff Response Looms

Despite Washington’s tariff offensive, Chinas exports remain resilient—fueling suspicions of tariff evasion. US tariffs on Chinese goods have failed to dampen demand, potentially redirecting US focus on China’s transshipment routes.

Despite US tariffs on Chinese goods, total exports rose 5.8% year-on-year in June after increasing 4.8% in May. Meanwhile, imports rose 1.1% YoY in June, following a 3.4% fall in May.

June’s trade data contrasted with June’s Caixin PMI surveys, which signaled weakening overseas demand. However, June’s official data suggests China continued to boost exports via third countries such as Indonesia and Vietnam.

In May, Chinese exports to Indonesia and Vietnam jumped 25% and 30% year-on-year, while exports to the US plunged 43%. China’s transshipments through Indonesia and Vietnam led to a 4.8% increase in total exports. The June numbers suggest a similar trend. However, recent trade developments could hit China’s exports via ASEAN countries.

Vietnam signed a trade deal with the US, agreeing to a 40% tariff on transshipments. Trump imposed a 32% levy on Indonesia, likely aiming to tackle China’s efforts to bypass US tariffs.

The Market Reaction to China’s Trade Data

Markets responded swiftly to the trade data, with equities and forex markets reflecting shifting sentiment.

The Hang Seng Index briefly dropped to a post-trade report low of 24,097 before rising to a high of 24,162. On Monday, July 14, the Index was up 0.04% to 24,149 for the morning session. US trade developments limited the impact of China’s trade data on Hong Kong-listed stocks.

In the forex market, the AUD/USD pair also reacted to the data, falling from $0.65628 to a post-report low of $0.65580 before climbing to a high of $0.65664. On July 14, the AUD/USD was down 0.10% to $0.65645.

The Aussie dollar remains sensitive to Chinese trade data. Australia has a trade-to-GDP ratio of over 50%, with China accounting for one-third of its exports. This leaves the Aussie vulnerable to US-China trade developments and demand trends for Chinese goods.

What’s Next? US Tariffs Take Effect on Tuesday

Traders could closely track trade developments. Rising US-China trade tensions could impact sentiment. However, progress toward a trade deal may lift sentiment.

Discover strategies to navigate this week’s market trends here.