If you were a betting man (and we are all one these days if we have money in the markets), you’d be entitled to have a quiet each way punt on China’s economic rebound developing a few holes.
April’s data flow yesterday added a fall in exports last month, to a surge in investment: good news offsetting not so good.
It was the sixth month in a row of falling exports for China.
It’s looking more and more like the rebound in exports will be fitful, while the figure to keep an eye on is the value of imports.
A surge in the next three months would confirm that the huge domestic spending program is at least working to suck in more goods and services for the domestic expansion programs now underway.
With inflation lower, especially producer prices and bank lending slowing, China is not looking the rolled gold bet to grab an 8% growth rate in 2009, and even if it does, it won’t be a solid rate.
The value of Chinese exports fell 22.6% from the same month of 2008 to $US91.9 billion.
That was a bigger fall than the hailed 17.1% fall in March, which was a definable improvement on the 25.7% plunge in January.
March’s performance saw many analysts and officials take it as a signal that external demand for Chinese goods was starting to recover.
Imports fell 23% in April from April 2008 to $US78.8 billion, leaving a trade surplus of $US13.1 billion against March’s surplus of around $US18.6 billion.
It was another month where imports have been down by more than 20%, a sure sign of the recessed state of the economy. (Down 25.1% in March and 24.1% in February.)
The fall in exports was far worse than the market forecasts for a 15.3% fall.
The combined foreign trade in April was worth $US170.73 billion, down 22.8% year on year, but up 10.4% from March.
Exports in the four months to April totaled $US337.42 billion, down 20.5%, and imports fell 28.7% to $US261.99 billion over the same period.
That shows you the extent of the domestic slump and how it is not improving, despite the spending and investment surge since January.
Fixed-asset investment in Chinese urban areas rose faster than expected in the first four months, jumping 30.5% from April last year and 28.6% in the March quarter.
That was slightly higher than market forecasts for a 29.1% rise in fixed investment.
State-backed infrastructure projects intended to boost flagging growth appeared to account for the majority of the investment but Beijing analysts claim the figures show the apparent bottoming out in house prices falls.
Chinese urban property prices fell 1.1% in April from a year earlier, compared with a fall of 1.3% in March. On a monthly basis prices rose 0.4% in April, compared with 0.2% in March.
That has sparked hopes the fall in housing values has stopped and prices are picking up.
House sales have risen a reported 35% in the four months to April.
The investment figures showed the number of new projects started in the first four months rose 45% to 86,420 from a year earlier.
Investment in property development rose 4.9% in April (4.1% in the first quarter).
Railway spending was again strong, up 94.2% while there was a 36.6% rise for coal extraction and processing and a 26.3% gain for non- ferrous metal processing.
All this sounds impressive, but it is in sectors of the economy where China doesn’t have any real need to invest (outside of railways). It already has considerable over capacity in coal and non-ferrous metals processing, for example.
China’s economic expansion weakened to 6.1% in the first quarter, the slowest in a decade.
The government has an 8% growth rate as a target, but the World Bank and IMF reckons China will grow by around 6%-6.5%.
