More details of China’s March trade performance (and that for the quarter), tells us the economy is actually looking a bit more sluggish than some think.
Much of the growth in imports this year has been from the rising cost of the products being shipped into the Chinese market, not from extra demand, which would normally be a sign of the domestic economy growing comfortably.
Growth for the March quarter is expected to be around 9.5%, down from the 9.8% in the 4th quarter of last year and 11.9% in the March quarter a year ago.
The rebound in exports, up 35.8% in March from March last year (and up from February’s 2.4% which was impacted by the Lunar New Year/Spring festival holidays) left China with a small surplus in March of just $US140 million (a deficit of $US7.3 billion in February).
Overall China had a deficit in the March quarter, the first in six years and imports were up 36.6% for the quarter, exports were up 26.5%.
In March, imports were up 27.3%; from the 19.4% rise recorded in February and for the quarter topped $US400 million for the first time, a sign.
Rising prices for raw materials such as oil, iron ore and coal helped push up the value of imports.
For example, import prices of iron ore, a key input for Chinese steelmakers, jumped 59.5% in the first quarter from a year earlier while the cost of soybean imports rose 25.7%.
But while March imports rose from the holiday shortened levels of February this year, the increases were marginal to non-existent on the same month in 2010.
For example imports of iron ore imports (probably a key indicator, along with copper and oil) rose 22% in March from February to 59.48 million tonnes, reversing the 29% in February. But compared with March 2010, they were only up 0.8% and imports for the first quarter were up 14% on the same quarter a year ago only because of the 19% surge in shipments in January ahead of the holidays.
Imports of unwrought copper and semi-finished copper products rose 29% in March to 304,299 tonnes, recovering from the 35% slump in February. But that was down a third from a year ago and for the first quarter the fall was 15.6%.
Soybean imports jumped 51% in March from February, but that was down 12.5% on a year ago. But imports for the first quarter were largely flat at 10.96 million tonnes, and that’s with China suffering from high food price inflation and the government lifting imports to try and put a lid on prices.
Oil imports rose 3% from February to 21.67 million tonnes, or about 5.1 million barrels per day (bpd), compared with 5.2 million bpd rate in February and a record hit last September at nearly 5.7 million bpd.
With global oil prices at $US112 to $US126 a barrel at the moment (US and London prices), the cost of landing oil in China is going to continue escalating, driving up the dollar value of imports.
The Chinese government allowed retail fuel prices by 5% to 5.5% last Thursday, the second increase this year, despite the inflation problems. That will push through into the CPI for April, but also cut refining costs and ease pressures on some of the big Chinese oil groups.
But as in the US, Europe, UK and Australia, the rising cost of fuel will have an increasing impact in China, not so much on drivers, but on the inflation rate, which remains the country’s (and the government’s) most vulnerable area.
And in another sign of a slower growth rate, sales of new cars in March rose 5.3% to 1.8 million units, the rate growth rate as seen in February.
Car sales in the first quarter were up 8% in the three months to March, 64% down on the growth rate for the first quarter of 2010.
The slower growth rates were blamed on higher oil prices, the ending of tax incentives, auto purchase restrictions in cities like Beijing and the Japanese earthquakes.
