The early flow of data from China is pointing to a very strong March quarter for the economy.
Already March car sales look solid, and a report on the Xinhua newsagency website over the weekend revealed the well-leaked fact that China had a trade deficit for March of $US7.3 billion, the first in six years.
Imports of iron ore, copper and aluminium were also very high (see the next story).
The reports go some way to confirming forecasts that Chinese growth was running at 12% (annual) in the March quarter and will continue at that rate for much, if not all, of the current quarter.
China’s exports rose 24.3% to $US112.11 billion in March, while the imports surged 66% year-on-year to $US119.35 billion, resulting in a trade deficit of $US7.24 billion.
The imports figures were skewed by the slump in imports in March 2009 because of the fall in world prices for commodities such as oil, coal and iron ore, and the fall created by the global slump.
Another distorting factor was the surging pace of activity in the economy last month as companies topped up raw material stocks after the Lunar New Year holidays in February.
And, even after accounting for that and the sluggish nature of March 2009, there was a genuine surge in imports in March, thanks mostly to high levels (volume and price) of imports of oil, raw materials (higher prices for coal, iron ore, oil, copper, nickel) and cars.
The real recovery in imports in 2009 didn’t really start showing up until the second half of 2009 as China’s stimulus spending and lending book started kicking in.
The deficit, which was the first since April 2004, came after Chinese government officials hinted in recent weeks that China likely imported more than it sold abroad in March.
Despite the March deficit, China’s trade surplus in the first quarter totalled $US14.49 billion, down 7.7% from the first quarter of 2009 which was depressed by the impact of the global recession and very bitter snowstorms.
The deficit is not likely to recur all that often and news of its timing should be seen against the continuing argument with the US over the value of the Yuan.
Chinese government officials used the news to make the point that the value of the Yuan had nothing to do with the surge in imports or the trade deficit.
Car sales in March climbed 55.8% from a year earlier to about 1.74 million units in March.
China’s Association of Automobile Manufacturers said the March sales figure means first quarter sales reached 4.61 million units, up 71.8% year-on-year.
Passenger car sales rose 63.2% to more than 1.26 million units in March, bringing the quarterly sales figure to more than 3.52 million units, up 76.3%.
The Association also said China produced more than 1.73 million cars in March, up 57.7% year-on-year, taking the first-quarter’s output to 4.55 million units, an increase of 77% from the March quarter of 2009.
Much of that increase was driven by favourable tax changes last year (now reversed) and easier credit.
The industry expects this rapid rate of growth to ease in coming months and predicts sales will be up 25% by the end of the year on 2009’s record.
A lot of other products will experience a similar slowing in growth, but the size of the totals will be enormous.
China’s 2010 car sales figures could top 16 million and go close to 17 million.
There are an estimated 192 million cars in China; that will rise to more than 200 million by the end of the year.
