The Apparel Digest Report
China’s exports increased more than expected in June 2025, delivering a much-needed boost to its weakening economy as global demand recovered and tensions with the United States temporarily eased. Official statistics issued by the General Administration of Customs indicated that exports increased by 5.8% year on year in US dollar terms, above Bloomberg and Reuters predictions of 5%. Imports also increased by 1.1%, the first increase this year and above the expected 0.3% gain.
The enhancement follows the initial trade agreement negotiated between Washington and Beijing in London last month, wherein both parties consented to temporarily reduce most tariffs for a duration of 90 days. The discussions in Geneva and London resulted in a slight decrease in tariffs and export restrictions, encompassing the reinstatement of Chinese rare earth shipments and US concessions on ethane, chip-design software, and jet engine components.
June’s strong performance sustained momentum in China’s trade sector, a vital component of the economy. In the initial half of 2025, total exports rose by 5.9% compared to the previous year, but imports declined by 3.9%. The trade surplus increased to $585.96 billion, or 35% higher than the corresponding period last year.
Export growth was mostly driven by increased exports to non-US markets. Exports to Southeast Asian countries increased by 16.8%, and to the European Union by 7.6%. Meanwhile, shipments to the United States were varied, with one estimate showing a 32.4% gain in June and another showing a 16.1% year-on-year reduction. Both agreed that the drop had slowed compared to prior months, indicating some relief from the tariff truce. Imports from the United States decreased 15.5% in June.
Industrial goods saw notable growth. Rare earth exports soared 60.3% to 7,742 tons — a record high — as buyers stockpiled before the August 12 deadline. Steel exports jumped over 10% to 9.7 million tons for the month, totaling 30.7 million tons in Q2. Integrated circuits, cars, and ships saw respective volume increases of 25.5%, 27.4%, and 11.9%. On the import side, soybean products and crude oil grew by 10.4% and 7.4%.
Zichun Huang, an economist specializing in China at Capital Economics, observed that the resurgence in June was partially facilitated by the alleviation of trade tensions. Nevertheless, she warned that tariffs remain elevated and Chinese businesses encounter increasing limitations in sustaining global market share via competitive pricing. Zhiwei Zhang of Pinpoint Asset Management stated that robust trade statistics mitigated sluggish domestic demand, likely maintaining GDP growth close to the government’s 5% target for Q2. He cautioned that the impetus from preemptive exports would diminish, rendering the forecast for the latter part of the year questionable.
Notwithstanding the enhanced trade performance, significant economic challenges persist. The official GDP figures for the second quarter are anticipated to reflect a 5.1% growth, somewhat lower than the 5.4% gain observed in the first quarter. China continues to grapple with a protracted debt crisis in the property sector, subdued consumer spending, and elevated youth unemployment rates. In June, consumer prices increased, ending a four-month period of deflation, but factory gate prices declined at the most rapid pace in over two years.
June’s trade performance has provided a timely boost to China’s economy, helping to counterbalance some of the weakness in domestic demand. While the data signals that global demand and diplomatic progress can play a constructive role, many analysts remain cautious, viewing the government’s growth projection as overly optimistic. Although exports have offered temporary respite, sustained recovery may depend on maintaining this external strength while reinforcing domestic demand to support long-term growth.
