Yes, the Chinese economy is slowing, no it isn’t a basket case. But growth has definitely slowed from more than 8% at end of 2012 to the range of 7% to 7.5% (down slightly from the first quarter estimate of 7.8%).
In fact, so far as Australia is concerned, May looks to have been a solid month with iron ore imports at their third highest level on record – again making a mockery of the gloomsters who reckon the slide in iron ore prices is terrible for Australia (not quite yet, if it will ever be).
Chinese companies took advantage of lower prices to boost stockpiles (iron ore, copper and soybeans all saw significant gains on April, but they fell on a year earlier), even though overall imports fell in the month in something of a surprise and export growth slowed to a crawl.
Inflation fell and producer prices continue to contract, pointing to continuing deflation in parts of Chinese manufacturing and services.
Industrial production was up 9.2% (annual) in May, nothing to boast about – but nothing like the slide seen in parts of Europe. The 9.2% was down from the 9.3% rate in April and more than 10% earlier in the year.
The growth trend definitely seems to be heading lower – towards 7% annual, rather than the official target of 7.5%. Some economists, such as the AMP’s Dr Shane Oliver reckon there’s a rising chance of a rate cut sooner than later in China.
Steel output rose 11.3% year on year to 91.19 million tonnes in May (it includes electric and blast furnace production), cement output increased 8.5% to 224.27 million tonnes, while 39.06 million tonnes of crude oil were processed during the period, up 2.4%.
Electricity output increased 4.1% year on year to 410.4 billion kilowatt hours in May, a solid indicator.
China imported 68.56 million tonnes of iron ore in May, up 2.1% from April and the third highest on record.
Year-to-date imports reached 322 million tonnes, up 4.7% from a year earlier.
The increase was driven primarily by Chinese steel production, with daily output running well above 2 million a day in May, despite claims from the steel industry of weakening demand. There have been similar reports of capacity cuts and maintenance closures this month.
Iron ore shipments were up 7.4% in May from the same month in 2012. The value of those imports rose 1% in May, but are down 4% for the first five months of this year from the same period in 2012.
China’s imports of anode, refined copper, alloy and semi-finished copper products reached 358,672 tonnes in May, up 21% from April’s 295,799-tonne.
China also imported 5.1 million tonnes of soybeans in May, up 28.1% from the 3.98 million tonnes in April. Reuters reported at the weekend that June imports of beans could total 7 million tonnes as importers get hold of cargoes delay by port congestion and strikes in Brazil.
Crude oil imports rose 0.4% to 5.64 barrels per day (bpd) in May.
The National Bureau of Statistics said China’s consumer inflation slowed to 2.1%, thanks to falling vegetable prices. That was the lowest in three months, while producer prices fell 2.9%, the lowest since September. Month-on-month, consumer prices fell 0.6% in May, showing the influence of the food prices on Chinese inflationary pressures.
Exports rose 1% in May from a year earlier, the lowest growth since last July. Imports fell 0.3% thanks to the falling cost of commodities such as iron ore, oil, copper and soy beans. Volumes for those and other commodity imports rose in May.
The trade surplus was $US20.4 billion for the month.
Exports to the US, China’s top export destination, fell 1.6% in May, the third monthly fall in a row, while those to the European Union, the second most important market, fell 9.7%, also the third straight monthly drop.
