China's imports grow at the fastest pace in 10 years

Today's customs data showed that China's imports grew at the fastest pace in 10 years in May, driven by higher commodity prices, while export growth beat expectations. May exports rose by 27.9% on yearly basis, slower than the 32.2% rise in April, while May imports rose by 51.1% on yearly basis, up from 43.1%.

China posted a trade surplus of $45.53 billion for the month, larger than the $42.86 billion surplus in April but less than the $50.5 billion that analysts had expected.

Analysts said the rapid recovery in developed market demand and disruptions caused by the coronavirus in other industrial countries boosted China's exports. However, exporters are grappling with rising raw material and shipping costs, logistical bottlenecks, and a stronger yuan, reducing business competitiveness.

Commodity prices such as coal, steel, iron ore and copper have risen this year, driven by the pandemic lockdowns easing in many countries and global liquidity shortages.

The yuan extended its rally in recent weeks to a three-year high against the dollar, while its strength has not yet affected China's trade surplus, but it could weigh on US consumers with higher prices.

The Biden administration is conducting a review of US-China trade policy, before the phase one deal expires at the end of 2021, which called on China to increase its purchases of US agricultural goods and manufactured products.