China’s May trade performance was better than forecast, but the data suggests an unbalanced level of activity in the economy thanks to Covid with signs high commodity prices are seeing some key import volumes trimmed and unwanted domestic production diverted into world markets.
As a result, China’s trade surplus widened sharply to nearly $US80 billion in May, despite the continuing impact from Covid lockdowns in wide areas of the country, especially major cities like Shanghai and Beijing.
The $US79.7 billion was the second largest on record after last December’s $US94.4 billion.
While the lockdowns have been eased, there were signs Thursday or a new round of restrictions in Beijing and in some parts of Shanghai as Covid cases continue to burble along.
May’s surplus – much higher than market forecasts around $US48 billion, was almost double the $US43.2 billion recorded in April when the lockdowns were at their toughest.
It was the largest trade surplus since January, as exports rose much more than imports.
Some analysts said there appeared to be signs of local production being diverted to exports because of the lack of any real sales growth in the wake of the lingering lockdowns
Export jumped by 16.9% year on year, the biggest increase in four months and off the back of a resume of factory production and an easing of logistic issues
Imports rose 4.1% year on year, as domestic demand rising, amid gradually reopening from its COVID-19 lockdown which saw imports flat in April9a 0.7% rise).
Imports were boosted by the higher prices for a range of commodities, such as coal, oil, iron ore – even though volume data isn’t released until later in the month, the real level of inbound shipments looks to have been weak.
Over the first five months of the year, the trade surplus was at totalled $US290.46 billion, with exports rising 13.5% while imports were up 6.6%
Looking at some key imports, iron ore stood out with a 7% rise in May (despite what Chinese domestic media claimed).
Iron ore imports amounted to 92.62 million tonnes in May, up from 86.06 million in April and 89.79 million tonnes in May last year. That was the best monthly performance this year and helps explain why iron ore prices have been firmer in the past month.
Imports of unwrought copper totalled 460,000 tonnes in May, slightly below 470,000 in April, but above the 450,000 tonnes from May 2021.
Crude oil imports were 46.1 million tonnes in May, equivalent to about 10.86 million barrels per day (bpd). That was marginally higher than April’s 10.47 million bpd. May’s imports though were up considerably (in volume terms) from May, 2021, 40.97 million tonnes.
Natural gas imports via both pipelines and as liquefied natural gas (LNG) totalled 9.04 million tonnes in May, up from April’s 8.09 million but down from 10.32 million in May 2021.
Coal imports amounted to 20.55 million tonnes in May, down from 23.55 million in April but steady with the 21.04 million tonnes from May last year.