China’s export growth showed resilience in April, defying expectations that the effects of the trade war with the US would begin to be felt. According to statistics released by China’s customs administration on Friday, exports increased by 8.1% year-on-year in dollar terms.

This increase was below the 12.4% growth recorded in March. However, according to data released by the customs administration on Friday, this increase was well above the 1.9% growth forecast in a Reuters poll of economists.

Imports, meanwhile, fell for the third consecutive month, contracting by 0.2% last month.

Exports to the US fell by 21% last month, while imports from the US decreased by 13.8%.

Exports to China’s largest trading partners, the Association of Southeast Asian Nations and the European Union, increased by 20.8% and 8.3% respectively.

The figures were released after Washington and Beijing entered a trade war.

US President Donald Trump last month implemented tariff increases of up to 145% on most products imported from China and said he would impose new tariffs even on low-value packages from the country. Beijing responded with a 125% tariff.

The two countries will begin trade talks in Geneva on Saturday. The US will be represented by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, while China’s delegation will be led by Vice Premier He Lifeng, the country’s top economic official.

This will be the first high-level meeting between the two sides since January, when Chinese Vice President Han Zheng attended Trump’s inauguration ceremony. Bessent said the trade war was “unsustainable.”

During the five-day May Day holiday, Chinese spending increased by 8% year-on-year, reaching 180.27 billion yuan (approximately $25 billion), indicating that consumer activity remains vibrant.

An estimated 314 million domestic trips were made, marking a 6.4% increase compared to the previous year.

The May Day holiday, one of the country’s longest breaks, is closely watched as a barometer of Chinese consumer confidence.

China’s Ministry of Culture and Tourism recorded 314 million domestic trips during the holiday, a 6.5% increase, while the number of transactions using Weixin Pay, a popular payment app, rose by more than 10% year-on-year, with a notable surge in restaurant spending.

According to Reuters’ calculations based on official data, total spending per person during the five-day May holiday period, typically a busy time for family travel, increased by 1.5% to 574.1 yuan.

This figure remained below pre-pandemic levels, when spending per person was 603.4 yuan.

Consumption in the world’s second-largest economy has been hurt by a post-pandemic slowdown and a prolonged property crisis, with the effects of the US-China trade war expected to deepen these challenges.

Meanwhile, China’s services sector saw a slowdown in new order growth compared to March, according to a private sector survey released on Tuesday, due to uncertainty caused by US tariffs.

Despite stronger-than-expected economic growth in the first quarter, supported by government stimulus, the Chinese economy continues to face persistent deflationary risks.

The Caixin/S&P Global services purchasing managers’ index (PMI) fell to 50.7 from 51.9 in March, marking its lowest reading since September.

This aligns largely with the official survey, which showed services activity in China easing to 50.1 from 50.3 the previous month.

The Caixin services survey indicated that new business growth slowed to its weakest level since December 2022, although export orders saw some increase, partly linked to the recovery in tourism.

Zichun Huang, China economist at Capital Economics, said the drop in the Caixin PMI “provides further evidence that the trade war is weighing on economic activity in China, even beyond the manufacturing sector.”

Huang added, “While some caution is clearly warranted, we suspect firms are overstating how much damage US tariffs will do.”

Around 48% of China’s workforce was employed in the services sector in 2023, and the sector contributed 56.7% to total GDP last year. However, US President Donald Trump’s trade actions could hit the manufacturing sector and damage businesses’ hiring plans and consumer confidence.

Business sentiment in the services sector grew at its slowest pace since February 2020, with companies citing US tariffs as a major concern.

Service providers cut jobs for a second consecutive month to reduce costs, leading to an increase in backlogs of work and pushing the relevant indicator into expansionary territory for the first time this year.

Firms also lowered prices to attract customers despite high input costs.

Chinese exporters are increasing their efforts to conceal the true origin of their goods by shipping them through third countries to avoid tariffs imposed by US President Donald Trump.

According to a report by the Financial Times (FT), the influx of goods from China has sounded alarm bells in neighboring countries, which are reluctant to become transshipment points for trade directed at the US.

The increasing prevalence of this tactic highlights concerns that new tariffs of up to 145% imposed by Trump on Chinese goods will impede exporters’ access to one of their most important markets.

Sarah Ou, a salesperson at Baitai Lighting, an exporter based in the southern Chinese city of Zhongshan, told the FT, “The tariff is very high,” adding, “But we can sell the goods to neighboring countries, and the neighboring countries can sell them to the US, and thus the tariffs are reduced.”

US trade laws require goods to undergo a “substantial transformation” in a country, typically including processing or manufacturing that adds significant value, to be considered the country of origin for tariff purposes.

However, advertisements on Chinese social media platforms like Xiaohongshu offer exporters the option of sending their goods to countries like Malaysia, obtaining new certificates of origin there, and then shipping them to the US.

An advertisement posted this week on Xiaohongshu by an account called ‘Ruby — Third Country Transshipment’ read, “Did the US impose tariffs on Chinese products? Transit through Malaysia and ‘transform’ them into Southeast Asian goods!”

It added, “Did the US impose restrictions on Chinese-origin wood flooring and tableware? ‘Wash the origin’ in Malaysia and pass customs smoothly!”

South Korea’s customs service announced last month that it had found 29.5 billion won ($21 million) worth of foreign products with falsified countries of origin in the first quarter of this year, most of which came from China and were almost entirely destined for the US.

The agency said in a statement, “Due to changes in the US government’s trade policy, we are seeing a sharp increase recently in cases where our country is being used as a transit point for products to avoid different tariffs and restrictions.”

Vietnam’s Ministry of Industry and Trade last month called on local trade associations, exporters, and manufacturers to strengthen origin controls for raw materials and input goods and prevent the issuance of fraudulent certificates.

Thailand’s Department of Foreign Trade also announced measures last month to tighten origin controls on products shipped to the US to prevent tariff evasion.

Ou from Baitai said that, like many Chinese manufacturers, the company ships goods “free on board” (FOB), meaning responsibility passes to the buyer once the goods leave the port of departure, thus reducing the exporter’s legal risk.

She said, “Customers just have to find a port in Guangzhou or Shenzhen, and as long as the goods reach there, we have completed our task. After that it is not our business.”

Salespeople from two logistics companies said they could ship goods to Malaysia’s Port Klang, where they would transfer the goods to local containers and change their labels and packaging. The salespeople, who asked not to be named, told the FT that the companies had connections with factories in Malaysia that could help issue certificates of origin.

Malaysia’s Ministry of Investment, Trade and Industry stated that the country is “committed to upholding the integrity of international trade practices” and “views any attempt to circumvent tariffs through false or fraudulent declarations, whether related to the value or origin of goods, as a serious offense.”

It added, “If the veracity of these reports is established, we will initiate investigations in cooperation with the customs department and US authorities and take necessary measures.”

China’s foreign and commerce ministries did not respond to the Financial Times‘ requests for comment regarding Chinese exporters.