[Chinese manufacturers face
escalating costs these days because prices have increased worldwide over the
past year for commodities like iron ore and copper and for industrial materials
like steel.]
China’s General Administration of
Customs announced on Tuesday that the country’s exports surged 32.2 percent in
June compared with the same month last year. The increase caught many
economists by surprise, as one of China’s biggest ports was partially closed
for most of June and China’s exports of medical supplies have begun to level
off.
China’s export performance in June
“is quite impressive and not so easy to understand,” said Louis Kuijs, the head
of Asia economics in the Hong Kong office of Oxford Economics.
Mr. Kuijs said that a little more
than a third of the increase in value of Chinese exports might reflect rising
prices. Chinese factories are passing on their own higher costs to foreign
consumers.
Chinese manufacturers face
escalating costs these days because prices have increased worldwide over the
past year for commodities like iron ore and copper and for industrial materials
like steel
China’s currency, the renminbi, has
also strengthened against the dollar. So Chinese producers need to charge more
dollars to pay the same wages and other costs denominated in renminbi.
By raising prices for foreign
buyers, Chinese factories can preserve their profit margins — at the risk of
contributing to inflation elsewhere.
Port and shipping delays are
driving the price tags for Chinese goods even higher in foreign markets. The
cost of shipping a 40-foot cargo container across the Pacific has ballooned
from the usual $4,000 to $5,000 to a record $18,000 or more.
Part of the problem lies in China’s
drastic actions to prevent new coronavirus variants from spreading. These
measures have included forcing port workers into lengthy lockdowns at the first
sign of outbreaks.
China’s policies have been
effective in keeping virus cases to a minimum, but at some economic cost.
One of the world’s largest ports,
Yantian Port in the southeastern Chinese city of Shenzhen, partially
shut down for more than a month from late May through much of June.
Shenzhen acted in response to fewer than two dozen coronavirus cases.
When the port fully reopened on
June 24, shipping executives and freight forwarders hoped that trade would
start returning to normal.
It has not worked out that way.
Dozens of huge container ships fell
far behind schedule when they had to wait weeks to dock in Shenzhen. That meant
ships later showed up in bunches at ports in other countries, causing further
congestion. Chinese export factories also sent goods by truck to alternative
ports, like Shanghai’s, leaving them overcrowded as well.
Zhao Chongjiu, China’s deputy
minister of transport, defended his country’s tough coronavirus measures.
“Everyone knows that during an epidemic, workers in ports must be placed under
lockdown, and various countries have taken corresponding measures, so the
efficiency of loading and unloading would be reduced,” he said when Yantian
reopened.
By mid-June, the freight yard was
so crammed with containers at Shanghai’s vast, highly automated Yangshan Deep
Water Port that the stacking cranes barely had room to lift containers on and
off ships. Dong Haitao, a senior administrator at the adjacent free trade zone,
blamed foreign ports for failing to handle arriving containers on time.
“Their schedule of shipments has
been disrupted, but not ours,” he said.
Shipping rates for containers have
continued to rise steeply in the weeks since Yantian Port reopened. The
increase is widely expected to keep going as stores in the United States in
particular race to restock shelves for returning shoppers and also start
preparing for the Christmas shopping season.
“Each week these rates go up
another few hundred dollars,” said Simon Heaney, the senior manager for
container shipping research at Drewry Maritime Research in London. “Nobody
seems to have any answers, and the only thing we can hope for is Chinese New
Year — and that’s obviously a long way off.”
Factories in China typically close
for several weeks during the Lunar New Year celebration, which could give the
world’s ships time to catch up. But next year’s holiday does not start until
the end of January.
Liu Yi and Li
You contributed research.
