Imports from China in May grew at the highest pace in the last decade, driven by rising demand for raw materials and despite the stops caused by Covid-19 cases in the country's main southern ports.
While a rapid recovery in developed markets has supported demand for Chinese products, a global shortage of semiconductors, raw materials and transportation costs, logistics bottlenecks and a stronger yuan have clouded the prospects for the world's largest exporting nation.
Most of the shipping companies have already informed customers about the congestion in the Yantian port of Shenzhen, Guangdong province, after the discovery of several cases of Covid-19 among port workers.
Factories in Guangdong have not yet reported important production cuts since the start of the pandemic, but admitted that they are meeting efficiency problems in trying to meet the huge foreign demand.
In addition to the impact of Covid cases in Guangdong, the global chip shortage has begun to affect all of China's semiconductor-related export items. This thing will increase the imports costs.
Chinese exports in May grew 27.9% over the previous year, less than the 32.3% growth reported in April and the analysts' forecast of 32.1%.
In particular, the export of rare earths grew by 11.6% compared to April, to 4.171 tons compared to 3.737 last month. For the fifth month in a row, growth is around + 8.7%, demonstrating the strong global demand for raw materials related to electronics and more.
Two-year average export growth fell to 23.4% in May from 36.3% in April, indicating weaker export momentum as the reopening of developed economies reduces demand for personal protective equipment (PPE) and products for work from home (WFH), based on what Nomura analysts reported.
China announced a trade surplus of $ 45.53 billion for the month of May, larger than the $ 42.86 billion surplus in April but less than the expected $ 50.5 billion.
At the same time, the sustained rally of the Yuan in these last weeks, reaching three-year highs against the dollar, could further weigh on Western consumers with higher prices. This thing will also increase the imports costs.
Since more than a year we are finding constant increases about product prices, this indicates how much the whole world depends on China for raw materials and manufacturing. We had wrote about this topic in April, showing why costs and delivery times are increasing about imports from China (you can read the article by clicking here).
Imports increased by 51.1% compared to last year (in dollar terms), the fastest growth since January 2011. This was partly achieved by the increase in the prices of raw materials such as coal, steel, iron and copper caused by the easing of pandemic blockades in many countries and ample global liquidity.
The Biden administration is conducting a review of US-China trade policy, in view of the expiry at the end of 2021 of the agreement signed during Trump's presidency, which asked China to increase purchases of US agricultural products and manufactures.
Since President Joe Biden took office in January, China has increased trade and economic relations with the United States. This should grow the imports quantity more than now.
Chinese Deputy Prime Minister Liu He spoke to US Treasury Secretary Janet Yellen last week, a few days after talks with US chief of trade Katherine Tai (source CNBC).
Import from China in this period requires more and more organization in order to reduce costs and delivery times. Relying on on-site partners is essential to overcome all the unforeseen and critical issues that this last period has reserved for us.
Tools like Noziroh Hub are the key to import products from China and managing production processes successfully. With a single partner will be possible to manage all the procurement phases, from the suppliers research to the production, from the storage of the goods to the shipment from China.
We don't recommend, more now than ever, to improvise when importing from China. It is too much risky and only through in-depth market research is it possible to verify the supplier or factory reliability.
Author: Alessandro Ave
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