China reports the fastest pace in its imports growth for the past 10 years in May. The country’s imports for the month grew almost as high as the expected number due to surging demand for raw materials. On the other hand, China once again struggles with COVID-19, resulting in slower export growth.
China benefitted through a brisk recovery driven by the developed markets. The global semiconductor shortage, though, is taking a toll even for China. Higher raw material and freight costs, logistics bottlenecks and a strengthening yuan are also clouding China’s future as the world’s largest exporting nation.
Imports in China inclined 51.1% on year last month in dollar terms. This record is by far the fastest since January 2011. Still, the figure is slightly lower than the poll conducted by Reuters noting a 51.5% rise.
The number, which translates to a gauge of import values, was partly flattered by hot raw materials prices. Demand for commodities such as coal, steel, iron ore and copper driven by easing pandemic lockdowns in many countries and ample global liquidity affected raw material prices as well.
A senior China economist at Capital Economics, Julian Evans-Pritchard, predicts the import volumes could flatten in May even though prices might rise at a rapid pace.
Evans-Pritchard said, “Once again, supply constraints are partly to blame – inbound shipments of semiconductors continued to drop back”. “So too did imports of industrial metals,” he added.
Growth for exports in China slows down
Noted from Reuters, exports for China grew around 27.9% in dollar terms in May from a year earlier. The digit is comparably lower than the 32.3% growth recorded in April. It is also lower than analysts’ forecast at 32.1%.
Upon the matter, a chief economist of Pinpoint Asset Management, Zhiwei Zhang commented, “Exports surprised a bit on the downside, maybe due to the COVID cases in Guangdong province which slowed down the turnover in Shenzhen and Guangzhou ports”. Zhiwei Zhang further added that China might still encounter slow exports in June due to reemerging COVID-19 cases in Guangdong.
On the whole, the two-year average growth for exports fell to 23.4% in May compared to 36.3% recorded in April. Analysts at Nomura reasoned that the reopening of developed economies could have reduced demand for personal protective equipment (PPE) and work-from-home (WFH) products. Both of these might further lead to weaker export moment.
Accordingly, the trade surplus for China in May reached $45.53 billion. This record is higher than the $42.86 surplus in April but still falls short of the expected $50.5 billion.
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