China’s shipments of hi-tech goods to the European Union went into overdrive in May, coinciding with a big drop in exports of the same goods to the U.S., suggesting that the U.S.-China trade and tech wars could be affecting trade with Europe. Calculations based on recently published Chinese trade data showed that China in May exported huge amounts of batteries, laptops, smartphones and solar panels to the EU, sending import numbers for some countries to unprecedented levels. China’s exports to Estonia soared 79.4% in May compared to last year, and for Cyprus the number was 70.5%, with 46.7% in Bulgaria and 42% in Hungary. The boom continued in bigger EU markets as France’s imports shot up 24.2%, Germany’s 21.72% and Sweden’s 20.4%. With many EU markets enduring falling exports to China, the cumulative impact was a 22% increase in the union’s trade deficit with China in May. The EU grows increasingly frustrated with Beijing’s refusal to take action on many trade grievances ahead of a planned leaders’ summit later this month. The bloc is declining to participate in a customary high-level economic dialogue ahead of the meeting, with sources indicating that they felt there was little point when China remained “intransigent”.
In many cases, the growth was powered by hi-tech goods. Lithium-ion battery exports across the bloc surged by 52% from a year earlier, powered by 56.4% growth in Germany and 41% in France. Growth levels of 1,207% and 1,068% were observed in Estonia and Bulgaria, respectively. These statistics came on the heels of the collapse of Europe’s own battery hope, Northvolt, which filed for bankruptcy in March. In Germany, the EU’s biggest economy and its largest trader with China, smartphone imports leapt 221.6%, while laptop shipments jumped 33.2%. At the same time, significant drops were recorded in China’s shipments to the U.S. American imports of smartphones from China plummeted 75.7% in May, laptops were down 52.28% and lithium-ion batteries tumbled 22.8%, calculations revealed.
The figures will be studied closely by the EU Commission, which is monitoring for trade diversion emanating from U.S. President Donald Trump’s high tariffs on Chinese goods. The EU Commission fears that shipments intended for the U.S. will be diverted to Europe at a cut price, squeezing out local producers. Earlier in June, officials said it was “too early to conclude” whether the tariffs have caused a diversion of exports to the bloc that would cause it to take emergency measures. “On the basis of the very first set of results, it’s not possible to draw any conclusions because it’s too early to conclude whether there is trade diversion,” explained an EU official.
Trade data also revealed a substantial rise in China’s shipments of small packages to Europe, as the bloc moves forward with plans to slap a flat-rate tax on parcels below a certain value. China’s exports of low-value items – which are not currently subjected to customs tariffs – increased by 72% in May compared to a year earlier, to USD2.69 billion, according to calculations based on recently published Chinese Customs statistics. In almost every country that showed high growth, low-value items were a major contributing factor. They accounted for 5.43% – or USD2.7 billion – out of China’s total USD49.5 billion in shipments to the EU in May. Belgium was the biggest market overall for small parcels from China, with more than half a billion dollars’ worth coming in, the South China Morning Post reports.
