May East Asia Export Slump: Vietnam Collapses, Korea's 8th Consecutive Drop

The external environment is severe and complex, with a collective decline in exports across East Asia in May this year.

Let's first look at Vietnam, which, after a difficult start in the first quarter, still performed poorly in the second quarter.

According to data from Vietnamese customs, Vietnam's estimated export value in May was $29.05 billion, a year-on-year decrease of 5.9%, marking the fourth consecutive month of decline for Vietnam.

Previously, HSBC issued a report pointing out that Vietnam's external demand is generally weak, with a significant decline in shipments of key products such as textiles, footwear, smartphones, and wooden furniture.

South Korea, which has heavily invested in Vietnam, also continues to experience low exports.

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According to data released by South Korea on June 1, the export value in May was $52.24 billion, a year-on-year decrease of 15.2%, completing an "8 consecutive decline".

In addition, South Korea's import value in May was $54.34 billion, a year-on-year decrease of 14%, with a trade deficit of $2.1 billion, marking 15 consecutive months of deficit.

This is also the longest record of South Korea's trade deficit since May 1997.

As major export countries, Vietnam and South Korea, this pair of "hard brothers," can be said to be in the same boat, with South Korea's decline leading to Vietnam's collapse.

In fact, not only Vietnam and South Korea, but also many Asian countries including India, Indonesia, Thailand, and Cambodia, are collectively under export pressure, and the results are not very good.As the largest economy in global foreign trade, how has China's export performance been?

China's foreign trade data for May released

On June 7th, the General Administration of Customs released China's foreign trade data for May.

To begin with the conclusion, compared to the unexpected growth of the previous two months, the year-on-year growth rate turned negative in May, showing poor performance.

In May, the total export amount valued in RMB was 1.95 trillion yuan, a year-on-year decrease of 0.8%;

The total export amount valued in US dollars was 283.5 billion, a year-on-year decrease of 7.5%.

Looking at the regions, China's exports to the United States in May decreased by 18% year-on-year, exports to ASEAN decreased by 15.9%, and exports to Latin America decreased by 11.6%.

Only exports to Russia achieved a significant increase, with a year-on-year growth of 114%.

This situation is not hard to understand, after all, Russia is currently being encircled by Western countries led by the United States and can only turn its attention to China, continuously expanding trade with China.

Looking at the products, among key export goods including mobile phones and integrated circuits, most of them experienced declines of varying degrees.The exports that saw a significant increase include automobiles, auto parts, ships, and refined oil products.

In fact, the export performance in March and April of this year greatly exceeded expectations, mainly driven by these products.

The export data for automobiles (including chassis) in May continued to be strong, with a year-on-year growth of up to 123.47%, reaching a record 438,000 units.

With the unexpected performance of the first two months setting a high bar, overall, China's foreign trade data for May seems somewhat disappointing.

However, it is important to look at the issue comprehensively. Considering the current global economic and trade situation, China's current foreign trade performance is actually quite robust.

Why have exports from many countries slumped collectively?

In fact, it is mainly due to the global economic environment.

Since the United States began a series of aggressive interest rate hikes in March of last year, initiating a worldwide "mowing the lawn" mode, the global economic environment has become increasingly turbulent.

In addition to the United States, many European countries, including Germany and France, have high domestic inflation levels, with shrinking consumer demand in the market, which also hampers trade growth.

Take South Korea, for example, due to its high dependence on overseas markets and the lack of abundant natural resources, South Korea has long been known as the "canary" of the global economy.As previously mentioned, South Korea's exports have already experienced eight consecutive declines, and semiconductors, which are the mainstay of South Korean export goods, have been in negative growth for ten consecutive months, with chip exports in May plummeting by as much as 36.2% year-on-year.

Moreover, the more serious issue lies in the fact that South Korea's exports to its six major destinations—China, the United States, ASEAN, the European Union, Latin America, and the Middle East—have all seen declines.

With weak economic growth in Europe and America and the total overseas demand remaining difficult to improve, export data naturally cannot be optimistic.

After all, even a "big spender" like the United States is tightening its belt, making the global trade data still hard to be optimistic about at present.

How resilient are China's exports?

Although Vietnam's exports achieved remarkable results that attracted global attention last year, showing strong performance, they have slammed on the brakes since the first quarter of this year.

This is mainly because, as a small export-oriented country, Vietnam's economic development is overly dependent on exports. Any slight change in the international market can cause a "gigantic wave" in Vietnam, causing the entire foreign trade exports to collapse.

Taking Vietnam's largest source of income, smartphones, as an example, there was a significant decrease of 16% in the first five months, while furniture and wood products saw a year-on-year decline of 28.7% in May.

The term "export resilience" can be said to have almost no connection with Vietnam.

So, what about South Korea?As a major exporter of chips, South Korea's chip industry heavily relies on the Chinese and American markets. However, by following the United States and restricting the development of China's semiconductor industry, South Korea not only lost a significant portion of the Chinese market but also inadvertently promoted the development of China's semiconductor industry, a classic case of "self-sabotage."

In May, South Korea's chip exports decreased by 36.2% year-on-year, directly dragging down the overall export performance. In contrast, China has maintained resilience in exports to key markets and for competitive products, with commendable performance.

For instance, in the automotive industry, China has traditionally been in a trade deficit, essentially engaging in "loss-making business." However, in May of this year, China's automobiles continued to show strong growth, with export values increasing by 123.47% year-on-year, becoming an important pillar of China's exports.

Furthermore, in the first five months of this year, China's exports to ASEAN increased by 16.4% year-on-year, and exports to the EU increased by 2.4% year-on-year. Despite the unfavorable external environment, the resilience of exports is evident.

It is also worth mentioning that the United States has now become China's third-largest export destination, with export values to the US decreasing by 8.5% month-on-month in May.

In conclusion:

The global economic recovery is far from imminent, and the total external demand is unlikely to improve in the short term.In the days to come, whoever has stronger export resilience will be able to achieve victory in such a "stock age."

Looking at the structure of export goods and the overall export market, China's advantage is clear at a glance.