Monday, June 7th, 2021
Expert suspects price effect
China reports significant trade growth
The world’s second largest economy reports strong growth rates in imports and exports for May. One of the reasons is the global economy picking up again. However, the data does not show whether Chinese companies really bought more or just had to pay more. An economist suspects just that.
China’s imports rose as strongly in May as they did ten years ago, also due to rising prices. As experts largely expected, imports climbed by more than half year-on-year, according to data from the customs authorities. In April the increase was more than 40 percent. Despite a strong increase of around 28 percent, exports fell short of expectations.
The exports would have benefited from the stronger demand in industrialized countries, said economists. However, exporters struggled with higher raw material and freight costs, logistical bottlenecks and a stronger yuan. China’s trade surplus climbed to $ 45.5 billion in May, after € 42.9 billion in April. However, analysts had forecast $ 50 billion.
Germany is the most important trading partner
Germany also benefited significantly from the strong recovery in China, its most important trading partner. According to the Beijing Customs Administration, imports from Germany rose 47 percent in May compared to the previous year. Conversely, China delivered 6.7 percent more goods to Germany.
From the entire EU, China imported 57.7 percent more than in May of the previous year. Exports to the EU countries rose by 12.6 percent. Despite the trade war with the United States, foreign trade with the United States also increased. China’s exports rose 20.6 percent, while imports rose 40.5 percent.
Increase only through higher prices
Capital Economics’ China expert Julian Evans-Pritchard said import prices for China’s importers rose sharply in May, but import volumes likely fell. “Once again, supply restrictions are partly to blame – semiconductor imports continued to decline,” he said. “This also applies to imports of industrial metals.”
The Commerzbank analysts pointed to weak imports of unprocessed copper. “This is where the record-high prices are obviously noticeable, which discourage Chinese retailers from making excessive purchases,” explained Commerzbank expert Daniel Briesemann. “We assume that the import dynamics of copper and iron ore will continue to decline in the next few months, as prices are still at high levels and construction activities will be reduced in summer due to the hot weather.”
China, which has long since overcome the Corona crisis, started the new year with record growth: the economy grew by 18.3 percent in the first three months compared to the first quarter of the previous year. It was the biggest jump since the quarterly evaluation began a good 30 years ago.
The government in Beijing is pursuing a “zero covid strategy”. With curfews, mass tests, contact tracing, quarantine and strict entry restrictions, the country has the coronavirus largely under control. There have been only a few, minor outbreaks since last summer, allowing the economy and everyday life to return to normal.
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