China’s imports hit a decade high

China extended its impressive trade performance in April with exports unexpectedly accelerating and import growth hitting a decade high. A brisk US economic recovery and stalled factory production in other countries hit by coronavirus have propped up demand for goods made in China. The booming US economy and the COVID-19 crisis in India, causing some orders to shift to China, have likely contributed to the strong export growth.

Imports were also impressive, rising 43,1% from a year earlier, the fastest gain since January 2011 and picking up from the 38,1% growth in March. However, import volumes for some products are starting to level off. China’s iron ore imports fell 3,5% in April from a month earlier, while copper imports dropped 12,2% on the month.

A persistent shortage of semiconductors needed for a wide range of products including consumer electronics and cars is also starting to hurt manufacturers, weighing on production.Etelec electronics, a Zhongshan-based manufacturer of LED lights, stopped taking on new orders from April 26, due to a shortage in integrated circuits.

The global chip shortage is compounded by other supply-side constraints including shipping disruption, container shortages and skyrocketing freight rates, as also in other advanced economies. Even ordinary consumers could notice that orders placed on well-known e-commerce platforms were cancelled due to excessively long delivery times. Moreover, shipping expeditions have become more spaced and concentrated, depleting normal orders and stocks for year 2021 and forcing sales managers to anticipate 2022 orders.

China’s official manufacturing purchasing managers’ index is showing factory activity growth slowed in April from a month earlier as supply bottlenecks hit production.

From political point of view China’s bilateral trade volume with Russia reached $40,207 billion in January-April 2021. China’s exports to Russia were +38,7%, reaching $18,19 billion in the first four months of the year, while exports of Russian goods to China saw a +7,7% equivalent to$22 billion. Numbers are still relative, but the political will to double them is strong. The bottom line is how much and how Moscow can manage a double trade imbalance with the EU and China.

On a more strategic side, disruptions associated to declared policies of national preference buys could induce Beijing’s authorities to issue formally or informally similar guidance documents on important public health security segments like biomedical equipment, whose importance has been evidently underscored by the pandemic.