China’s imports are growing the fastest in a decade as material prices rise

© Reuters. FILE PHOTO: Containers are seen at Yangshan Deep-Water Port in Shanghai, China, October 19, 2020. REUTERS / Aly Song

BEIJING (Reuters) – China’s imports grew the fastest in 10 years in May, driven by rising demand for raw materials, although export growth slowed more than expected, weighed down by disruption from COVID-19 cases in the country’s major southern ports.

While a rapid recovery in industrialized countries boosted demand for Chinese products, global semiconductor shortages, higher raw material and freight costs, logistics bottlenecks and a strengthening yuan clouded prospects for the world’s largest export nation.

China’s exports in US dollars grew 27.9% yoy in May, slower than April’s 32.3% growth and missed analysts’ guidance of 32.1%.

“Exports surprised a little on the downside, perhaps due to the COVID cases in Guangdong Province that slowed sales in the ports of Shenzhen and Guangzhou,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, adding that the Sales in the ports in Guangdong will likely remain slow in June.

Major shipping companies warned customers of worsening congestion at Yantian Port in Shenzhen, Guangdong Province, after multiple cases were discovered among port staff.

On-site factories in Guangdong have not yet reported large-scale capacity cuts during the outbreak, but admitted efficiency issues as they tried to meet overseas demand.

Chen Linsheng, COO at Anlan, a Shenzhen-based skin and beauty care equipment manufacturer, told Reuters that although there was no impact on production, employees are now undergoing a series of COVID tests and are not allowed to come in without a negative result the factory return earnings.

“We’re not allowed to go out (of the city). We have to report in advance and can’t even go to Guangzhou or Foshan on our own,” said Chen, adding that many meetings are back online.

In addition to the impact of the Guangdong COVID cases, global chip scarcity has started to hit all of China’s semiconductor-related export items, said Iris Pang, chief economist for Greater China at ING.

For example, auto processing products and parts, the largest export item, fell 4% year over year, Pang added.

At the same time, the ongoing rally in the currency in recent weeks to almost three-year highs against the dollar could continue to weigh on US consumers with higher prices.


Imports rose 51.1% year over year in dollar terms last month, the fastest growth since January 2011 but slower than the 51.5% increase reported by Reuters poll.

However, that number – a measure of import values, not quantities – has been partly flattered by hot commodity prices with demand for raw materials such as coal, steel, iron ore, and by the easing of pandemic lockdowns in many countries and abundant global liquidity.

Julian Evans-Pritchard, chief China economist at Capital Economics, said while import prices rose rapidly, import volumes likely fell slightly in May.

“Again, delivery bottlenecks are partly responsible – incoming deliveries of semiconductors continued to decline,” he said. “Also imports of industrial metals.”

In fact, iron ore futures were down more than 3% on Monday as trading data overshadowed the demand outlook.

China posted a trade surplus of $ 45.53 billion for the month, more than April’s $ 42.86 billion surplus but less than an expected $ 50.5 billion.

The Biden administration is conducting a US-China trade policy review ahead of the Trump-era “Phase 1” deal expiring in late 2021, urging China to increase its purchases of US agricultural and manufactured goods.

Since President Joe Biden took office in January, China has stepped up its engagement with US trade and economic leaders. China’s Deputy Prime Minister Liu He spoke to US Treasury Secretary Janet Yellen last week, just days after talking to US Commercial Director Katherine Tai.

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