BEIJING (Reuters) – China’s exports likely extended brisk growth in May as major trading partners emerged from their pandemic-driven downturns, while surging raw material costs were seen lifting the value of imports, a Reuters poll showed.
Although the statistical base effects of sharp declines seen a year ago are seen keeping trade growth elevated, real demand has also made a significant recovery.
Exports are expected to have risen 32.1% in May from a year earlier, according to the median forecast in a Reuters poll of 21 economists, largely in line with a 32.3% gain in April.
Imports likely rose 51.5% in May versus a year ago, the poll showed, higher than the 43.1% growth in April. Analysts attributed the jump to surging commodity prices, revived domestic demand and a low base effect.
China’s commerce ministry said on Thursday it expects outbound shipments to maintain good momentum in the first half of 2021.
“Demand in developed economies stayed elevated in May, and the resurgence of coronavirus cases in emerging markets has led to slow production and continued shift of orders to China,” said analysts with China Minsheng Bank.
Solid demand was seen in U.S. and European factory surveys, which showed manufacturing activity expanding at the fastest clip in years.
However, exporters are grappling with higher raw material and freight costs, logistics bottlenecks and a strengthening yuan, which diminishes trade competitiveness.
Prices for commodities such as coal, steel, iron ore and copper have surged this year, fuelled by easing pandemic lockdowns in many countries and ample global liquidity.
China’s policymakers have expressed concern about rising commodity prices in recent weeks and called for stricter management of supply and demand and to crack down on “malicious speculation.”
The yuan is near three-year highs against the U.S. dollar, having risen 1.4% over the past four weeks.
China’s official PMI on Monday showed factory activity growth slowed slightly in May as raw materials costs shot up, weighing on the output of small and export-oriented firms.
The trade surplus is expected to be $50.5 billion in May, widening from $42.86 billion in April, the poll showed. The data will be released on Monday.
“The pandemic-induced surge in China’s share of global exports is likely to reverse in the coming quarters as virus disruptions fade and global consumption patterns return closer to normal,” said analysts with Capital Economics.
They also expect recent policy tightening to become a more forceful drag on the economy later this year.
Reporting by Lusha Zhang and Ryan Woo; Editing by Sam Holmes
