China trade surges as demand grows

China’s imports grew at their fastest pace in 10 years in May, fuelled by surging commodity prices, while export growth missed expectations, likely weighed by disruptions caused by Covid-19 cases at major ports in the country’s south.

Exports in dollar terms grew 27.9 percent in May from a year earlier, slower than the 32.3 percent growth reported in April and missing analysts’ forecast of 32.1 percent.

“Export 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,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, adding that turnover at ports in Guangdong will likely remain slow in June.

Major shipping companies have warned clients of worsening congestion at Shenzhen’s Yantian port in Guangdong province after the recent outbreak.

Zhang expects this shock to be transitory and the current outbreak in Guangdong to be brought under control in a few weeks.

In the meantime, Chinese exporters are grappling with higher raw material and freight costs, logistics bottlenecks and a strengthening yuan, which diminishes trade competitiveness.

However, a brisk recovery in developed market demand and disruptions caused by Covid-19 in other manufacturing nations are likely to bolster China’s exports in coming quarters, analysts say.

Imports increased 51.1 percent year-on-year last month, the fastest growth since January 2011 and picking up from a 43.1 percent rise in April, but slower than the 51.5 percent rise tipped by the Reuters poll.

China posted a trade surplus of US$45.53 billion for the month, wider than the US$42.86 billion surplus in April but less than the US$50.5 billion expected.

Prices for commodities such as coal, steel, iron ore and copper have surged this year, driven by easing pandemic lockdowns in many countries and ample global liquidity. (Reuters)