China’s Imports Rise — But It Appears Raw Materials are Driving the Trend

China has been much maligned in these Western pages (and many others) for maintaining what many believe is an unfair trade surplus with the West based in large part upon artificial manipulation of its currency, incentive based export (VAT) rebates and other means. Yet China's recent trade numbers paint a different picture (at least on the surface). Accordingly, China's August exports climbed 34.4% while imports climbed 26.1%. This import number was roughly 30% above the forecast rise in trade expectations. Yet dig below the surface, in articles such as this, in the FT, and you'll find a situation where the import/export numbers become much more murky, especially when it comes to what China is importing.

According to the FT, "China, the world's largest consumer of commodities, including copper and iron ore, registered strong growth in crude oil and copper imports in August ... Imports of copper jumped 16.7 per cent from a year earlier." And "Soybean imports could reach 50m tonnes this year, as China's demand for imported agricultural commodities is growing strongly," according to one expert who is quoted in the article. Yet I'm not entirely convinced these numbers are accurate.

Indeed, China may be importing more. But much of the growth appears to be coming from raw materials and commodities rather than finished products and higher-valued added parts/components, which generate the types of overseas manufacturing and related jobs that China itself continues to focus on creating. I suspect if we strip out raw/base materials and agricultural items such as the ones that are fueling China's import growth, that the true numbers would paint a different picture. To me, this is further proof that companies completely dependent on buying from China would do well to consider developing alternatives, as this country's government -- and others -- take a closer look at the fairness of China's trade practices, and potentially implement tariffs and sanctions in response to a growing feeling that we've had the red blanket pulled over our economic eyes.

Jason Busch

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