The numbers told a boom-like story, but further data – after the surveys of manufacturing and service sector activity – suggests that the strength of the current Chinese economic rebound is not as sound as it seems.
Take the May trade data, issued yesterday.
It showed that China’s imports jumped more than 50% in May – the fastest pace in 10 years fuelled by surging prices for commodity such as iron ore, copper, lead, zinc, oil and thermal and coking coal
The 51.1% surge in May followed an equally impressive 43.1% jump in April and 38.1% in March. But much of that was due to the jump in commodity prices since earlier this year, plus the base affect in the comparison with a year ago when demand and trade was weak due to the Covid lockdowns and pandemic.
Export growth was solid but missed forecasts thanks to by disruptions caused by Covid-19 cases at major ports in the country’s south and as continuing shortage of computer chips and shipping containers.
China’s exports though were still up an impressive 27.9% in May as compared with a year earlier, according to customs data released Monday.
That was lower than forecasts by analysts in a Reuters poll for a 32.1% year-on-year jump in exports and 32.2% reported for April by the Customs Bureau.
May was the 11th straight month of increase in exports, amid a strengthening yuan, a further recovery in foreign demand, and higher raw material costs and logistics bottlenecks – especially in some southern Chinese ports.
The surge in imports however didn’t stop China from posting a trade surplus of $US45.53 billion for May, higher than the $US42.86 billion surplus in April but less than the $US50.5 billion forecast.
The trade surplus for May was down more than 26% from a year ago of $US61.9 billion. That’s when the Chinese economy was still shaking off the impact of the Covid driven lockdowns which sent commodity prices plunging – especially, oil, copper and iron ore, for example.
Customs data released Monday showed total exports climbed 40% in the first five months of the year from a year earlier. They were up 29% from the same period in 2019.
The boost from last year’s slump is fading, however, and the $US263.9 billion in Chinese exports in May was about level with the April’s figure (currency movements played a part in that outcome though) . China’s imports of $US218.4 billion in May were 1.2% lower than in April.
For the first five months of 2021 the trade surplus widened sharply to $US203.45 billion, from $US117.55 billion in the same period of 2020.
Exports jumped 29% year-on-year to $US1.24 trillion, while imports soared 24.3% to $US1.03 trillion. Much of the rise in the latter has come from the surge in commodity prices in recent months led by oil, LNG, copper, some agricultural products, other metals and iron ore.
China’s sensitive trade surplus with the United States rose to $US31.78 billion in May, from a $US28.11 billion surplus in April.
For the first five months of 2021, China’s trade surplus with the United States stood was $US132.46 billion, compared with a $US100.68 billion surplus in January-April.
China’s imports may have grown at the fastest pace in 11 years in may but most of the rise was due to higher prices and not volumes – a strong suggestion that the country’s economy is as good as it gets now without overheating.
The 51.1% surge in May followed an equally impressive 43.1% jump in April and 38.1% in March.
But much of that was due to the jump in commodity prices since earlier this year, plus the base affect in the comparison with a year ago when demand and trade was weak due to the Covid lockdowns and pandemic.
Chinese Customs data released Monday showed total exports climbed 40% in the first five months of the year from a year earlier. They were up 29% from the same period in 2019.
The boost from last year’s slump is fading, however, and the $US263.9 billion in Chinese exports in May was about level with the April’s figure (currency movements played a part in that outcome though). China’s imports of $US218.4 billion in May were 1.2% lower than in April.
For example, China’s iron ore imports in May fell 8.9% from April earlier to 89.79 million tonnes. That was down 12.7% from the record 102.11 million tonnes in April.
Iron ore imports were up 3.2% from May, 2020’s 87.03 million tonnes. The small rise from the depressed May 2020 level (when they fell 9% from April 2020) suggests the country’s appetite for iron ore and steel is weakening.
For the first five months of the year, China brought in 471.77 million tonnes of iron ore, up 6% from the same period in 2020. It was up 6.7% in April and 8.6 in the first quarter of 2021 which confirms the demand for steel and iron ore is softening
Imports of crude oil fell 14.6% from a year ago (when China lifted imports after buying heavily when crude prices fell sharply to close to zero in April 2020).
As well post-winter overhauls at refineries cut demand for crude oil feedstock. Crude oil imports in May fell 14.6% from a year earlier to 40.97 million tonnes.
For the five months of 2021 to the end of May, crude imports rose 2.3% to 221 million tonnes.
Total natural gas imports, including liquefied natural gas (LNG) and piped gas (from Russia), reached 10.32 million tonnes in May, up from 10.15 million tonnes in April and up 31.7% from 7.84 million tonnes in May 2020.
May’s figure is up sharply from November’s 6.43 million tonnes and confirms that the country is facing rising energy shortages from a combination of drought in southwest parts of the country and a reluctance to run coal-fired power plants to make up the difference.
LNG and natural gas imports are being boosted to try and alleviate the problem. Parts of China in the south and southwest have had to suffer electricity supply interruptions (brown and blackouts) in the past few weeks because of the shortage.
The ban on Australian thermal coal imports isn’t helping either.
China’s coal imports in the first five months of this year are down 25% at 111 million tonnes on a year ago.
By way of contrast, Chinese imports of natural gas from January to May are up 24.5% to 49.78 million tonnes – and much of that is coming from Australia.
Despite record copper prices in May imports rose 2.2% from a year earlier to 445,725 tonnes. That took China’s imports of raw copper from January to May to 2.37 million tonnes, up 8.4%.
China’s soybean imports rose in May from the previous month as more cargoes from Brazil cleared customs. A total of 9.61 million tonnes of the oilseed were imported in May, up 29% from 7.45 million tonnes in April.
May’s imports were also up from 9.38 million tonnes in the same month a year ago.
China imported 38.23 million tonnes of soybeans in the first five months of 2021, up 12.8% from the same period last year, according to the trade report.
China imported 789,000 tonnes of meat in May, down 3.3% from the May 2020, customs data showed on Monday and down from April’s 922,000 tonnes as more pork became available in China.
Meat imports in the first five months of the year are still up 12.6% on the same period of last year, however, at 4.34 million tonnes.