Trade relations between China and the United States have experienced a noteworthy decline as reported data from China's customs authority indicates substantial reductions in both imports and exports.

In May 2024, Chinese exports to the United States decreased by 34.5% when measured in US dollars, while imports fell by 18.1% compared to the previous year.

In mid-May, both countries reached a temporary agreement to pause the escalating tariff conflicts and significantly reduce import duties on each other's goods.

Following this, senior representatives from both nations convened in London to further discuss unresolved trade issues.

Key topics on the agenda included China's export controls over critical industrial resources such as rare earth materials and magnets, which China processes predominantly worldwide.

Conversely, the United States has imposed restrictions on the sale of advanced technologies, including essential components for aerospace and microchip design that China depends on.

Despite the decline in trade with the United States, China's overall foreign trade witnessed a growth trend in May 2024, with exports rising by 4.8% year-on-year.

However, imports saw a decrease of 3.4%, resulting in a trade surplus of approximately $103 billion (about €90 billion).

These figures fell slightly short of analysts' expectations, which had projected a 5% increase in exports alongside a slight decline in imports.

The trade conflict has compelled Chinese exporters to seek alternative markets.

Notably, exports to Germany surged by 21.5% in May, while imports from Germany to China decreased by 1.3%.

This decline highlights the weak domestic demand within China, which complicates economic conditions for German companies operating there.

Representatives from the German Chamber of Commerce express concerns regarding China's export regulations for rare earth elements, emphasizing the urgent need for streamlined processes to avoid production delays.

China's economy continues to grapple with sluggish domestic demand, evidenced by declining import figures.

Despite a focus on industrial expansion, this has led to an oversupply in certain sectors, driving down export prices for various goods, notably in the solar industry.

Contributing to the low consumer spending is the ongoing real estate crisis, where falling property values have diminished investment returns for many individuals, adversely affecting overall consumer sentiment.

Additionally, deflationary pressure poses a challenge, with consumer prices in May 2024 recorded at 0.1% lower than the previous year, potentially impacting corporate profits and employment stability in the long run.

As discussions progress in London, the attention remains on addressing the export control measures of rare earth materials and the US technology restrictions.

The outcomes of these negotiations hold significant implications for future trade dynamics between the two largest economies in the world.