LAUNCESTON, Australia – (Reuters) – It’s becoming increasingly hard to make Chinese commodity import data fit with the prevailing narrative of a softening in the world’s second-biggest economy.
Trade figures released Nov. 8 showed ongoing strength across a broad spectrum of commodity imports, with the only consistent weak spot this year being coal.
October iron ore imports may have slipped 6.3 percent from the previous month’s high to 79.39 million tonnes, but they are still up 16.5 percent in the first 10 months of the year over the same period in 2013, on track for the strongest annual growth since 2009.
Unwrought copper imports gained 2.6 percent from September, and are 9.3 percent up in the first 10 months of 2014, while imports of copper ores and concentrates have jumped 17.2 percent so far this year.
Crude oil showed a 15.5 percent decline on a barrels per day (bpd) basis from September, dropping to 5.67 million bpd in October, but total imports have gained 9.2 percent in the first 10 months of the year over the same period in 2013.
Only coal looks as anemic as many commentators suggest the overall Chinese economy is, with imports dropping 4.9 percent in October from September, taking the year-to-date decline to 7.7 percent.
But even coal’s poor performance only serves to accentuate just how strongly import volumes have grown for the other major commodities over the year so far.
So, how can this resilience in commodity imports be harmonized with the narrative that the Chinese economy is running out of puff amid a series of risks, mainly related to over-investment in residential property?
Or does the narrative need to be reworked to explain why commodity imports have remained robust?
Perhaps it’s easier to try and find the reasons why the narrative of a softening Chinese economy is true, and commodity imports are an exception to this.
NOT ALL STRENGTH CAN BE EXPLAINED AWAY
There are always questions about the accuracy of the customs data, and this has been heightened by concerns this year about multiple-invoicing and round-tripping of commodities related to the shadow financing system and the tax system.
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