China's Four-Month Deflation Extends to May; Trade Surplus Widens Amid Cooler Export Growth

Li Chen
09 Jun, 2025
Hong Kong

Stocks in China and Hong Kong advanced on Monday, and investors reviewed the latest updates on international trade and inflation.

The Hang Seng Index increased 1%, and the CSI 300 index edged up 0.2%, and consumer and producer prices eased last month. 

Consumer price inflation declined 0.1% in June, matching the decline in the previous month, the National Bureau of Statistics reported Monday.

Prices fell for the fourth consecutive month, driven by sluggish consumer demand and trade tensions with the United States. 

Core inflation, which excludes volatile food and energy prices, rose 0.6%, driven by a 0.5% increase in service prices. 

Producer price inflation decreased 3.3% in May, extending the deflationary trend to the 31st consecutive month. 

The ongoing deflation is driven by a trend of weak consumer demand and falling automobile prices, as leading vehicle makers cut prices to attract buyers for electric vehicles. 

China's exports rose at a slower pace in May amid simmering trade tensions with the U.S.

Exports increased 4.8% from a year ago in May to $316.1 billion, customs data showed on Monday.

Exports to the United States declined at a faster 34.5% compared to the 21% decline in the previous month, as importers held back amid constantly changing U.S. trade policy and import taxes. 

However, shipments to ASEAN member nations soared 14.8%, amid strong demand for transshipments. 

Imports declined 3.4% to $213 billion, faster than the 0.2% fall in the previous month. 

China's trade surplus widened sharply to $103.2 billion, from $81.7 billion a year ago and from $96.2 billion in April.

Export and import outlook in the months ahead is highly uncertain, as the U.S. and China trade negotiation drags on with no clear agreement in the near future.  

China's exports are likely to fall off in the second half, as U.S. businesses' frontloading will fade in the months ahead. 

 

China Indexes and Stocks 

The Hang Seng Index gained 1% to 24,030.93, and the CSI 300 index added 0.2% to 3,880.83. 

Mainland China-based Midea Group and ZTO Express were added to the Hang Seng Index. 

Midea Group Company declined 1.2% to HK $75.30, and ZTO Express Inc. added 4.5% to $139.90.  

Toymaker Bloks and bubble tea retail chain operators Mixue and Guming were added to Stock Connect, facilitating cross-border investments.  

Bloks Group soared 18.2% to HK $187.0, Mixue Group jumped 4.5% to HK $573.0, and Guming Holdings Ltd. added 2.6% to HK $27.20.