China Data Drop Paints Mixed Picture

By Glenn Dyer | More Articles by Glenn Dyer

A mixed bunch of data from China on Thursday and Friday.

China’s exports rebounded last month but imports dropped for the fourth month in a row as the trade war with the US stumbles onwards without any real sign of a deal.

Car sales though fell for yet another month, bank lending though soared, hitting record levels in the March quarter and inflation jumped sharply on higher pork prices.

For Australia imports of iron ore rose in the month but shipments of LNG fell to year lows, while coal imports were mixed as China took more coal from Mongolia than Australia.

Overall, March exports rose 14.2% from a year earlier, the strongest growth in five months. That was double the rate forecast by the market and came after the 20.8% slide in February caused by companies bringing forward exports into December and January to beat the late timing of the Lunar New Year in February.

It was a different story so far as imports are concerned with a much bigger drop reported, suggesting weak demand.

Imports fell 7.6% from March 2018, larger than the 5.2% slide in February.

That left the country with a trade surplus of $US32.64 billion for the month. That was sharply above the $US7.55 billion deficit a year earlier.

In the first three months of 2019, exports rose 1.4%from a year earlier, while imports were down 4.8%.
China’s March trade surplus with the US —the most sensitive measure given the continuing trade war between the two countries — was $US20.5 billion and higher than the $1US4.72 billion in February.

That was due to a sharp fall in Chinese imports from the US in March especially as the trade war hit harder at American exporters of oil, gas, soybeans coal and some manufactured goods.

For the first quarter in total, China had a $US62.66 billion surplus with the United States. That was up slightly from the $US58.25 billion surplus in the first quarter of 2018.

Meanwhile March new bank lending data showed a surprisingly big jump as loans, credit and M2 all bounced back more strongly than forecast.

That was “Consistent with the central bank easing and pointing to a pick up in economic growth later this year,” according to a weekend note from AMP Chief Economist, Dr Shane Oliver.

Chinese banks extended 1.69 trillion yuan ($US251.59 billion) in net new yuan loans in March, up sharply from February and far more than expected, as policymakers push bankers to keep lending to struggling smaller companies, even at the risk of more bad loans.

Total bank lending in the first three months of 2019 hit a record quarterly tally of 5.81 trillion yuan (more than $US750 billion), suggesting months of policy loosening by the central bank is working (such as cutting the reserve ratios for banks and ordering the billions liberated to be lent to small and medium businesses).

China’s car sales fell by an overall 5.2% in March. But new energy vehicle (NEV) sales however, which include electric vehicles however, soared by 85.4%.

Sales of SUVs, sedans, and minivans dropped 6.9% from March 2018 to just over 2 million, according to the China Association of Auto Manufacturers (CAAM).

It was the ninth straight month of falls but an improvement over the 17.5% slump in January and February.

Over the first three months of the year, passenger vehicle sales slumped 13.7% to 5.3 million.

Sales of SUVs, usually a bright spot for the industry (as they have been in Australia), fell 14.2% over the quarter.

And March inflation data showed a sharp rise for consumers thanks to rising pork prices thanks the culling of tens of millions of animals to combat a continuing outbreak of swine fever.

Consumer inflation accelerated to 2.3% in March (compared with March 2018), up from 1.5% in February.

That was the biggest jump in more than a year and was driven by higher pork prices as well as price rises for vegetables. Together they sent the CPI up half a percentage point according to the National Bureau of Statistics.

Core consumer prices, excluding food and energy, stayed flat at 1.8%, and factory inflation (Producer Price Inflation) rose 0.4% (Shaking off several months of disinflation).

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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