Chinese Economy Heads for Crack of Mount Doom as Dumping Fuels Export Growth

FT: China export surge points to improving economic outlook
China reported stronger than expected trade data on Wednesday, the latest sign of a tentative revival in fortunes that paves the way for Friday’s release of first-quarter economic growth.

Exports surged 18.7 per cent in renminbi terms in March over the same month last year, after declines in both January and February. Imports also stabilised, dropping just 1.7 per cent compared with an 8 per cent fall in February.
China is supposed to be rebalancing, imports should be rising faster than exports.

China is not rebalancing.
Their cause has been boosted by a slew of better than expected data releases, including March inflation figures that showed producer price deflation had moderated.

This contributed to the IMF’s decision to revise upwards its forecast for Chinese economic growth this year, to 6.5 per cent from 6.3 per cent. At last month’s meeting of China’s parliament, Premier Li Keqiang projected economic growth of 6.5-7 per cent for 2016.

“China’s commodity imports should see further improvement soon,” said Zhou Hao at Commerzbank.
Price deflation moderated because commodity prices spiked.

In normal times, the rebound in activity is positive. In 2016, it is not. China needs to grow imports to avoid a political confrontation with the United States; it is going in the opposite direction. China needs to cut fixed asset investment; it is going in the opposite direction.

Import/Export Volumes

Digging into the data from customs shows year-to-date imports volumes are rising strongly for: vegetable oil (up 38 percent); copper mining equipment (34 percent); copper (30.1 percent); natural and synthetic rubber (32.6 percent); natural gas (22.4 percent)'; crude oil 13.4 percent).

Import volumes which are down double digits through March include: autos, LCD displays, diesel, grains, fresh fruits and vegetables.

Export volume growth: rare earth minerals (up 109.4 percent); coal (185.1 percent); refined oil (48.2 percent); coke (22.1 percent); ships (19.9 percent); steel (7.9 percent).

China dumped its overcapacity onto the world market.

Trading partners

Imports from Hong Kong continue to accelerate, the March YTD import growth is now 102.7 percent (in RMB). Total trade with Hong Kong is up 2.3 percent.
Imports from and exports to the United States, Germany and the EU are both down YTD; figures for Canada are both down double digits.
Exports to Australia up 3.9 percent; imports down 25.7 percent.

Exports to emerging markets improved. India, Thailand and Russia are the three major trading partners with both positive export and import growth.


This month's trade figures are adding ammunition to anti-trade arguments in the United States and elsewhere.

NWI Times: Clinton vows to take on steel dumping, Chinese overcapacity
Democratic presidential front-runner Hillary Clinton condemned Chinese steelmaking overcapacity after the country exported a record 112 million tons of steel last year, which is widely credited with a global import crisis that resulted in nearly 12,000 announced steelworker layoffs in the United States.

She said that, if elected president, she would crack down on Chinese steel dumping, including by tripling the number of trade enforcement officers.

"Just last week, I went to the AFL-CIO convention in Pennsylvania and said that I would not tolerate attempts by China to solve its growing economic problems on the back of American workers," Clinton said in a statement. "A few days later, they announced plans to keep propping up significant overcapacity in their steel production – meaning that they’ll keep unloading artificially cheap steel into global markets at the expense of countries and workers that play by the rules."

Clinton vowed she would confront China on trade abuses, such as the steel dumping that caused nearly 1,000 layoffs at Northwest Indiana steel mills last year.

"As president, I’ll aggressively pursue trade cases and impose consequences when China breaks the rules by dumping its cheap products in our markets," Clinton said in a statement. "And I’ll oppose efforts to grant China so-called 'market economy' status, which would weaken our tools for dealing with this behavior. I’ve gone toe-to-toe with China's top leaders on some of the toughest issues we face. I know how they operate – and they know that if I’m president, the games are going to end."

Clinton said she would pursue countervailing duties on cheap steel imports, confront countries that manipulate their currencies to ensure their goods are artificially cheap, triple the number of trade enforcement officers and appoint a new trade prosecutor who reports directly to the president. She said she would oppose trade agreements like the Trans-Pacific Partnership if they don't create jobs and raise wages in America, and that she would renegotiate NAFTA and review other trade deals that have hurt American workers.

FT: China says its steel overcapacity will remain
Significant overcapacity will remain in China’s steel sector even after planned restructuring, industry executives said at the weekend, suggesting no let-up for the beleaguered industry’s plant closures and job losses across the globe.

...Luo Tiejun, an official with China’s industry ministry, said at a conference that planned cuts would reduce annual steel capacity to about 1.1bn tonnes by 2020 while domestic consumption was unlikely to exceed 700m tonnes.

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