1 Beyond the headlines of China’s ‘strong’ April trade data
China’s trade data, Jan-April 2026
On May 9, the PRC’s General Administration of Customs released China’s trade data for the first four months of 2026. The data showed both exports and imports having significantly exceeded market expectations and reached new historical monthly highs.
April 2026 (single month data)
- Total trade volume increased 18.7 percent year-on-year to reach $634.06 billion.
- Exports increased 14.1 percent year-on-year to reach $359.44 billion.
- Imports increased 25.3 percent year-on-year to reach $274.62 billion.
- The trade surplus decreased 12 percent year-on-year to reach $84.82 billion.
January–April 2026 (cumulative data)
- Total trade volume increased 18.2 percent year-on-year to reach $2.326 trillion.
- Exports increased 14.5 percent year-on-year to reach $1.33688 trillion.
- Imports increased 23.6 percent year-on-year to reach $989.19 billion.
- The trade surplus decreased 5.7 percent year-on-year to reach $347.7 billion.
Trade performance by major region in April
- Exports to the United States increased 11.3 percent year-on-year, reversing from previous negative growth.
- Exports to the European Union increased 13.4 percent year-on-year.
- Exports to ASEAN increased 15.2 percent year-on-year.
- Exports to Latin America increased 13.7 percent year-on-year.
- Trade with Russia grew 25.7 percent year-on-year.
Imports
- Imports of energy and mineral resources such as crude oil increased in value by 13.2 percent despite a 20 percent decline in import volume, as higher prices fully offset the drop in quantity.
- Most of China’s increase in energy imports came from Russia (up 13.3 percent) and Indonesia (up 107-fold year-on-year, making it China’s third-largest source of crude oil imports).
- Imports of high-tech products driven by semiconductors increased 31.5 percent, including a 54.7 percent surge in integrated circuit imports. However, imports of automobiles, aircraft, and medical equipment all declined.
Our take
On the surface, China’s trade data painted a picture of strong recovery. This growth, however, did not stem from an endogenous recovery in global demand. Rather, the growth is a mirage created by the convergence of Trump’s tariffs running into legal issues at home, a global inventory-restocking cycle triggered by geopolitical conflict, and panic-driven low-price dumping by Chinese producers trapped in extreme domestic “involution.”
1. One of the core drivers behind April’s export rebound was the intervention of the U.S. judicial system in Trump administration trade policy.
In February 2026, the U.S. Supreme Court ruled in “Learning Resources Inc. v. Trump” that the Trump administration’s broad tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful. This led to the cessation of collection of related additional tariffs starting Feb. 24 and the emergence of a temporary “tariff vacuum window” for Chinese exporters. Although the Trump administration quickly responded by imposing a 150-day temporary tariff under Section 122 of the Trade Act of 1974, the resulting legal confusion provided Chinese exporters with an excellent speculative opportunity and triggered a wave of “rush shipments.” Data showed that China’s exports to the U.S. rose 11.3 percent year-on-year in April, reversing the sharp contraction seen in March (negative 26.5 percent).
Official PRC state media is depicting the surge in Chinese exports to America as “evidence” of the “stabilization in China–U.S. economic and trade relations.” However, the narrative obscures the fundamentally short-term and opportunistic nature of the surge.
2. The outbreak of the U.S.-Israel-Iran conflict earlier in the year and the partial closure of the Strait of Hormuz (leading to disruption of global energy routes and stranded ships in the Persian Gulf) appear to have benefited China’s trade in the short term.
China demonstrated a significant “substitution effect” during the crisis:
- China’s manufacturing costs remained more competitive than those of Europe, Japan, and South Korea, all of which are highly dependent on Middle Eastern oil and gas.
- As manufacturing in Southeast Asia, Japan, and South Korea encountered disruptions, China became the primary alternative supplier capable of absorbing global orders.
- Although China’s crude oil import volume declined 20 percent year-on-year in April, the value of its imports still increased 13.2 percent due to surging prices. At the same time, China sharply increased purchases from Russia (up 13.3 percent) and Indonesia (up 107-fold) in order to stabilize supply.
In addition, the energy shock generated by the U.S.–Iran war boosted global demand for green energy equipment.
However, the Middle East crisis was not without costs for China’s own energy position. In 2025, China’s official average oil import price was approximately $70 per barrel, with total annual expenditures of $296.5 billion. If oil prices remain at current levels throughout the year, China could face an additional annual energy bill of roughly $120 billion, exceeding the combined 2025 revenues from stamp taxes and land appreciation taxes collected by the Chinese government. Indeed, part of the 12 percent year-on-year decline in China’s April trade surplus could have been driven by sharply rising energy import costs.
3. Despite the strong export figures, domestic economic indicators reveal a far harsher reality: Chinese firms are trapped between externally oriented dumping and internally driven economic contraction.
In April 2026:
- China’s consumer price index (CPI) rose 1.2 percent year-on-year. Meanwhile, the producer price index (PPI) rose 2.8 percent year-on-year and jumped 1.7 percent month-on-month. The much faster rise in PPI relative to CPI indicates that upstream industrial costs — particularly fuel and raw materials affected by war — are increasing rapidly, while weak end-user demand prevents companies from passing these costs on to consumers. This further compresses already-thin corporate profit margins.
- According to data from the China Passenger Car Association, national passenger vehicle retail sales in April totaled only 1.384 million units, down 21.5 percent from a year ago. This stands in stark contrast to automobile exports, which surged 54.1 percent year-on-year during the January–April 2026 period.
- Exports of new energy vehicles (up 68.1 percent), lithium batteries (up 43.2 percent), and wind turbine equipment (up 40.7 percent) all maintained rapid growth. Following the collapse of China’s real estate bubble and the resulting “consumption trap,” however, China’s massive industrial capacity can no longer be absorbed domestically. Chinese companies are therefore being forced into “anti-involutionary” low-price dumping simply to survive.
4. On May 1, the European Union–Mercosur free trade agreement entered into “provisional effect.” The agreement covers four South American countries, including Brazil and Argentina, with more than 90 percent of goods set to gradually become tariff-free. This will place European-made automobiles and high-end machinery in direct price competition with Chinese products, challenging the “South-South cooperation” framework that China has cultivated for years. The agreement is widely viewed as a major geopolitical-economic blow against China by the EU.
The agreement explicitly grants EU companies preferential access to Mercosur’s critical raw materials, including lithium, niobium, and graphite. This effectively amounts to “pulling the rug out” from under China’s new energy supply chain strategy, as Europe seeks to establish an independent “strategic raw material reserve base” in Latin America outside China’s sphere of influence. Through the weaponization of zero-tariff arrangements, the EU is looking to pull Latin American economies back into the Western system and weaken China’s influence across the “Global South.”
5. Beginning in 2026, the EU’s full implementation of the Carbon Border Adjustment Mechanism (CBAM) and import quota policies is delivering a highly targeted blow to China’s heavy industries.
The EU plans to reduce annual steel import quotas by 47 percent and double over-quota tariffs to 50 percent. This constitutes a nigh insurmountable cost barrier for China’s steel sector, which relies heavily on high-carbon production processes.
The EU’s move is shifting the logic of trade from “price + quality” to “quota + low-carbon certification.” Because China’s carbon market prices remain far below those in Europe ($10 versus $100 per ton), CBAM could effectively erase the price advantage of Chinese exports.
6. Beyond tariffs and carbon taxes, Chinese exports are now confronting a third layer of pressure, namely, the “politicization of standards.”
In April 2026, the EU proposed revisions to its Cybersecurity Act, introducing assessments of “non-technical risks.” China and certain other countries would be designated as “high-risk states,” with restrictions imposed across 18 sectors including energy, transportation, and ICT.
The EU recently prohibited financing support for photovoltaic projects using Chinese-made inverters, citing cybersecurity concerns. This form of “label-based exclusion” directly undermines China’s leading position in new-energy infrastructure and could trigger a broader chain reaction among Western countries.
7. Taken together, China’s official April 2026 trade data represented a temporary “rebound” for the Chinese economy under conditions of extreme internal and external pressure:
- April’s external trade performance received a boost from U.S. court rulings that were unfavorable to Trump’s tariff policy. This momentum, however, is likely to evaporate over time should the Trump administration resort to sounder tariff moves.
- The U.S.–Iran conflict unexpectedly increased global demand for Chinese green-energy equipment, but such demand will fluctuate alongside geopolitical tensions.
- Rising PPI figures and the sharp collapse in passenger vehicle retail sales (down 21.5 percent) suggest that domestic demand is approaching exhaustion. China’s export strength is therefore not a sign of prosperity, but rather a negative externalization of domestic economic distress into global markets.
- From the EU–Mercosur free trade agreement in South America, to CBAM’s green trade barriers, to cybersecurity-based technological exclusion, Western countries are shifting from price-based defense toward institutional and standards-based defense. Unless China’s export model evolves beyond low-cost subsidies toward genuine breakthroughs in core technologies, it may face a comprehensive contraction in market access in the future.
In summary, China’s economy is now trapped between mounting internal and external pressures. The “healthy” export growth figures in April have merely delayed the eruption of structural contradictions, without fundamentally resolving the deeper deadlock of an economy characterized by “internal contraction and external spillover” (內縮外溢).
2 People’s Daily claims that Sino-US relations ‘cannot return to the past’ on day of Trump visit
On May 13, CCP mouthpiece People’s Daily published a 4,700-character signed commentary article on its third page titled “China–U.S. Relations Cannot Return to the Past, but Can Have a Better Future — Written on the Occasion of the Meeting Between the Chinese and U.S. Heads of State” (中美關係回不到過去，但能夠有一個更好的未來——寫在中美元首會晤之際). The piece was widely republished by state media outlets.
Main points of the article include:
- The commentary noted that the United States launched two rounds of trade wars against China in 2018 and 2025. It described Sino–U.S. relations as moving from a state of “gathering storm clouds” toward “renewed stabilization.” The article claims that both sides gradually accumulated consensus through repeated cycles of “fighting and negotiating,” while their mentality and methods in dealing with one another slowly evolved. Today, the commentary claimed, dialogue between the two sides has become “more equal,” communication “more pragmatic,” and each side’s “bottom lines clearer.”
- The commentary stated that confidence is growing in the ability of China and the U.S. to resolve disputes through “equal consultation.” It argued that behind this change in confidence lies a deeper transformation in perceptions and in the overall strategic landscape.
- The commentary said that the most important issue for both countries is establishing a correct “strategic understanding” of whether China and the U.S. are fundamentally rivals or partners.
- The commentary said that China has both been willing to “talk” and dared to “fight” in the face of tariff wars and trade wars in recent years, which demonstrated China’s “hard-core strength.”
- According to the article, changes in the pattern of Sino–U.S. interaction have led more people to recognize that China’s development and rise represent a historical trend, and that any attempt to contain or suppress China is doomed to fail.
- The commentary said that direct dialogue and strategic guidance between the Chinese and U.S. leaders (such as between Xi Jinping and Donald Trump) are the key “anchor of stability” ensuring that bilateral relations can navigate dangerous waters without veering off course or losing momentum.
- The commentary stressed that the Taiwan issue is the most important and sensitive core issue in Sino–U.S. relations and concerns the political foundation of bilateral ties.
- The commentary emphasized that China–U.S. economic and trade cooperation serves as the “ballast stone” of the relationship. Dialogue is preferable to confrontation, and cooperation superior to zero-sum competition. The commentary added that China’s high-quality development would provide broader opportunities for American companies, and that the prosperity of both countries is not mutually exclusive but can instead be mutually reinforcing.
- As an example, the commentary cited how members of the American business community, anxious about soybean exports, sought engagement with China’s ambassador to the United States. The commentary presented this as evidence that Sino–U.S. economic relations should remain “mutually beneficial and win-win.”
- The commentary argued that the foundation of bilateral relations lies with the people, while the future lies with the youth. It referenced historical “Ping-Pong diplomacy,” as well as current youth exchange programs and visa-free policies, to illustrate how people-to-people exchanges can benefit China–U.S. relations.
- The article concluded by stressing that amid an increasingly unstable global environment, China and the United States — as the world’s two largest economies and permanent members of the United Nations Security Council — must cooperate in promoting global economic stability, maintaining international peace and security, and improving global governance in areas such as artificial intelligence and transnational crime.
On the same page as the People’s Daily commentary was news coverage of President Donald Trump’s visit to Beijing. The report on Trump’s trip, however, was compressed into a small section in the middle of the fourth column on the right-hand side, surrounded by three separate commentaries on China–U.S. relations and two articles concerning visits by leaders from other countries. Concurrently, state mouthpiece Xinhua published multiple commentaries on Sino–U.S. relations, emphasizing themes such as “dialogue is better than confrontation.”
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Originally scheduled for April, Trump’s Beijing trip was pushed back a month following the outbreak of the U.S.-Israel-Iran conflict. Trump’s visit takes place amid growing economic difficulties in both countries; the economic situation for the PRC and the U.S. has only become more challenging with Iran’s partial closure of the Strait of Hormuz and Trump’s naval “blockade.”
Our take
The People’s Daily commentary on China-U.S. relations reflects the CCP’s current thinking and discourse framing on the matter.
1. The People’s Daily commentary revives the CCP’s narrative of “victory through struggle” by portraying the PRC’s recent trade clashes with the U.S. not as a period of economic setback, but a process in which China compels America to the negotiating table with its “hardcore strength.”
One of the central arguments in the commentary is that Beijing is not afraid to go toe-to-toe with Washington on trade matters. The commentary asserts that China had demonstrated a posture of being “willing to negotiate and daring to fight” in the face of tariff and trade wars, thereby supposedly earning “international respect.” Trump’s May visit is subtly cast as “evidence” that the U.S. is seeking reconciliation with China after the failure of his “maximum pressure” trade strategy. This framing allows Beijing to obscure the reality of China’s economic slowdown in 2025, including GDP growth falling to 4.8 percent and mounting “involution” pressures in manufacturing caused by industrial overcapacity.
The commentary leverages China’s macroeconomic trade data (including a massive trade surplus of $1.1 trillion in 2025) to promote the idea that the PRC is “unbreakable.” Simultaneously, the commentary uses America’s dependence on exports to China — such as Boeing aircraft orders and soybean exports — to create the impression that Washington “had no choice but to negotiate.”
The commentary indirectly attempts to spin efforts by Washington to seek Beijing’s help with the Iran conflict into the former recognizing the latter’s strength. Repeated emphasis in the piece and elsewhere with the implied notion that “the United States must cooperate with a strong China” essentially conveys to the domestic audience that America, despite its outward toughness, ultimately cannot operate without China’s assistance at critical moments. This narrative also endeavors to portray any temporary U.S.-China compromise based on mutual interests as a comprehensive strategic victory for the PRC.
2. The People’s Daily commentary’s observation that “China-U.S. relations cannot return to the past” is not a nostalgic reflection, but rather, a political declaration that the PRC has completed its transformation from a “follower” of America into a “great power equal.”
In the CCP’s strategic thinking, there were still elements of asymmetry in the U.S.-China relationship as recently as a decade ago (even during Trump’s first trip to China in 2017). At that time, the PRC had not fully transitioned away from Deng Xiaoping’s framework of “hiding strength, biding time” and was more about integrating China into the international order rather than leading it. By 2026, however, the People’s Daily commentary had argued that “changes in the pattern of China-U.S. interaction have led more people to recognize that China’s rise is a historical trend… and that America’s view of China has become more equal, which has become a consensus within international strategic circles.” Put another way, Beijing is promoting the idea that the U.S. and China are now engaging on “equal footing.”
This “equal footing” narrative implicitly rejected the previous order. In Beijing’s view, past bilateral relations were based on rules established by the U.S., whereas “not returning to the past” meant that future rules must be jointly formulated by China and the United States. This declaration of power parity appears to be aimed at extracting greater concessions from Trump during his Beijing trip and in upcoming negotiations. In areas such as artificial intelligence and semiconductor technology, for instance, Beijing is likely to reject unilateral U.S. restrictions and demand security dialogues based on “equality and mutual respect.”
The CCP’s emphasis on “not returning to the past” at this time appears to be intended to establish conditions within Trump’s transactional style of diplomacy. Beijing seems to be signaling that if the U.S. will have to pay a higher price — including recognizing China’s “right to development,” respecting its political system, refraining from supporting “Taiwan independence,” reducing export controls on high technology, and avoiding “color revolutions” or limiting arms sales to Taiwan — if it seeks China’s cooperation on energy supplies and other geopolitical issues. In a sense, Beijing is moving away from the diplomatic courtesies it extended to Washington in the past and is looking to engage in overt power politics.
3. The People’s Daily commentary’s assertion that “there can be a better future” has a distinct messianic tone, with the PRC cast as the “savior.” The CCP is claiming that the world is entering a period of instability and the U.S. and China have to work together to provide certainty. Implicit in this claim is that the world will not have a stable future if U.S. does not cooperate with a powerful PRC.
On specific issues, Beijing linked this “better future” to multiple geopolitical flashpoints. The commentary argued that global governance reform, combating illegal migration, AI safety, and responses to infectious diseases all required Sino-American cooperation. Regarding “maintaining peace and security,” the articles referenced the Middle East situation and the Iran conflict, portraying China as making sacrifices to establish a postwar international order and calling on both sides to jointly preserve the “hard-won” foundations of that order.
The hypocrisy of this logic lies in the CCP’s attempt to present itself as a defender of international order even as it challenges existing international norms in areas such as the South China Sea and Taiwan, and with its “long march through the institutions” by installing its agents or proxies in United Nations organizations and other international bodies. The “correct way of getting along” promoted in the People’s Daily commentary essentially demands that the U.S. recognize the PRC’s expansionist actions as part of its “core interests.” If Washington accepts this framework of “cooperation,” Beijing would describe it as a “better future”; if Washington rejects it, Beijing can turn around and accuse the U.S. of embracing “zero-sum thinking” and a “Cold War mentality.”
Additionally, the CCP is using its 15th Five-Year Plan and vision of transforming China from the “world’s factory” into the “world’s market” as “bait” to reel in American capitalists to the PRC’s side. If the top American executives accompanying Trump in Beijing (including Tesla’s Elon Musk, Nvidia’s Jenson Huang, Apple’s Tim Cook, and several heads of leading financial institutions) buy into the CCP’s vision and are enticed by other incentives, they will likely endeavor to lobby the Trump administration and other future administrations to integrate the U.S. and China more closely instead of waging in trade conflicts. The return of “engagement” would be the ideal outcome of Beijing’s “better future,” or a state of affairs where the U.S. no longer or minimally seeks to contain and obstruct the PRC’s development and geopolitical expansion, and both sides maintain sufficient economic cooperation to facilitate China’s technological ascent.
4. The layout of the May 13, 2026 edition of the People’s Daily suggests that Beijing is subtly disparaging President Trump’s latest China trip. This is a reflection of the CCP’s true attitude towards Trump and the United States.
First, news of Trump’s visit to China did not appear as the front-page headline. Instead, it was placed on page three, and the headline itself was highly standardized and devoid of enthusiasm. In sharp contrast, the lengthy commentary declaring that “China-U.S. relations cannot return to the past” occupied a far more prominent position. Per the CCP’s propaganda logic, such an arrangement signified that Beijing is much less concerned about Trump personally or the issues he brought up, and more about asserting its own “right of definition” and control over the narrative framework surrounding the visit.
Second, although the commentary appeared to promote China-U.S. cooperation, it actually served to diminish the United States. The commentary frames the U.S. as the party “making mistakes” and China as the party “correcting deviations.” The commentary also repeatedly makes criticisms of the U.S. through phrases such as “some people in the United States remain obsessed with zero-sum competition” and “trapped in the mistaken logic of ‘you lose, I win.’” Finally, the commentary attempts to create the sense that “the U.S. has no choice but to seek China’s cooperation” and depicts Trump’s Beijing trip as a journey of recognizing that “reality.” Such framing on the very first day of the guest’s (Trump and entourage) arrival suggests that the CCP is less keen on cooperation and more interested in subjugation.
The People’s Daily’s layout and narrative style also served the purpose of appeasing domestic nationalist sentiment. The CCP still has the need to demonstrate to the Chinese public that the regime has not yielded to American pressure following the intense tariff escalations of 2025. By “coldly handling” Trump’s itinerary in page design while emphasizing China’s “hardcore strength” in the text, Beijing is looking to pre-transform any diplomatic compromises that it might have to make during Trump’s trip into a political demonstration of strength.
5. The CCP’s propaganda direction regarding Trump’s Beijing visit and the direction of Sino-U.S. relations is both a tactical adjustment and a continuation of existing policy direction. In particular, the People’s Daily commentary is consistent with the logic on international relations during Xi Jinping’s “new era” as laid out by Central Party History and Documentation Research Institute dean Qu Qingshan in his seminar article on understanding Xi’s “Two Establishes” published in July 2022.
In his piece, Qu noted that the world is seeing “great changes unseen in a century” and Xi’s “Two Establishes” constitute the fundamental guarantee for responding to these historic transformations. In the May 13, 2026 People’s Daily commentary, “head-of-state diplomacy” was described as “steering the ship,” guiding the massive vessel of China-U.S. relations “through dangerous rapids and shoals.” In other words, the CCP is re-emphasizing Xi’s primacy and “strategic resolve” in tackling Sino-U.S. troubles in recent years (tariff wars in 2025 and geopolitical crises in 2026), and the continued relevance of the “Two Establishes.”
The “main contradiction” mentioned in Qu Qingshan’s article — namely the struggle between hegemonism and peaceful development — plays out in the 2026 People’s Daily commentary as the contrast between America’s “zero-sum mentality” and China’s “win-win cooperation.” The depiction of the U.S. as an “erroneous opposing force” in international politics serves to highlight the “advanced character” (先進性) and “stable character” (穩定性) of China’s own system.
Finally, Qu’s reference to the “profound changes in the international balance of power” — the notion that “the East is rising while the West is declining” — was “validated” by the “cannot return to the past” narrative of 2026. From the CCP’s perspective, its survival of Trump’s tariff escalation in 2025 and America’s current geopolitical and domestic troubles prove correct the “foresight” of the “Two Establishes.” Therefore, China-U.S. relations must now operate according to a new set of coordinates defined by the PRC. This ideological closed loop allows the CCP, even when dealing with an unpredictable leader like Trump, to maintain an internally coherent political logic and justifies continuing its geopolitical ambitions under the guise of “peaceful coexistence.”
6. In sum, China-U.S. relations “cannot return to the past” because the CCP has already decided to challenge the existing international order. Also, Beijing believes that there “can be a better future” because it seeks to exploit America’s perceived decline and internal instability to secure strategic room for expansion.
Businesses, investors, and governments should look beyond the CCP’s propaganda narratives to glimpse the true nature of its “win-win cooperation.” Such cooperation is not the beginning of peace, but the continuation of a higher-level, more concealed form of systemic confrontation. In the CCP’s eyes, the “better future” between China and the U.S. essentially amounts to a state of “cold peace” in which the latter gradually accepts the former’s leadership position, while both sides engage in a form of “managed coexistence” amid persistent mutual suspicion. This “truce” is unlikely to be attainable or lasting as countries and governments increase their awareness of the CCP threat as Beijing advances its external domination agenda.
