China’s imports of major commodities are holding up well, according to market consensus, but that in itself is quite concerning for the overall state of the world’s second-biggest economy.
Commodities are often viewed as the canary in the coal mine, with falling demand a sign of economic troubles ahead. Likewise, consumption of natural resources should pick up ahead of a more general recovery.
The fact commodity imports haven’t weakened does allow some of the more alarmist views of China’s economy to be discounted.
But equally, the absence of a resurgence in imports means any significant, infrastructure-led recovery is not yet on the horizon, even if it is coming, as is the widely-held conviction.
“July commodity imports held up,” was how Barclays headlined a report on China’s trade data, while London-based consultancy Capital Economics said, “Commodity imports hold up well.”
These were just two of several reports that struck similar notes, although many analysts also questioned whether those commodities exhibiting strength in imports are doing so because of underlying demand in China, or for other reasons.
Crude oil imports, for instance, rose to 30.71 million tonnes in July, a gain of 4.1 percent on the prior month and 29.3 percent higher than in the same month a year ago.