- China's June exports grew 5.8% year-over-year, driven by recovering US trade and continued indirect shipments through Southeast Asia
- High-frequency shipping data indicates a slowdown beginning in July, particularly for US-bound exports
- New US trade agreements with Vietnam threaten China's transshipment strategy, potentially affecting $35 billion in exports
China's trade performance in June painted a picture of resilience amid ongoing global tensions, but emerging data suggests the momentum may be short-lived.
Strong performance in June 2025
China's export growth accelerated to 5.8% in June, up from 4.8% in May, exceeding analyst expectations. This improvement was largely driven by a smaller decline in shipments to the US, where exports fell only 2.4 percentage points compared to a 5 percentage point drag in May. The recovery reflected a resumption of trade following the Geneva talks and a 90-day tariff pause that began on May 14.
Meanwhile, China's trade surplus is on track to reach a record high of over $1 trillion this year, supported by strong exports and subdued imports.
The transshipment strategy
A significant portion of China's export strength came from indirect shipments through Southeast Asian countries, particularly Vietnam. Chinese exports to Vietnam surged 33% year-over-year in June, while Vietnam's exports to the US increased 32% during the same period – a clear indication of transshipment activity.
Storm clouds ahead
However, early July data reveals concerning trends. Daily container ship tonnage from China to the US dropped 8.9% week-over-week in early July, signaling potential front-loading effects as buyers stocked up during the tariff pause window.
More critically, new US trade agreements with Vietnam threaten to disrupt China's transshipment routes. Barclays estimates that approximately $35 billion in Chinese exports – representing 1% of China's total exports – could be affected by these new restrictions.
The combination of ending trade truces and crackdowns on transshipments suggests China's export growth may slow significantly in the second half of 2025.