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For some, a Chinese hard landing isn’t off the table. But one detail from December’s trade report could disappoint those expecting it. Societe Generale’s Wei Yao, who was named the second most accurate forecaster on the Chinese economy by Bloomberg, has previously explained that imports are a good economic indicator for Chinese hard/bumpy/soft landing watchers.
This is because imports centre on investments and have a domestic demand component to them. Moreover, import data is one of the more reliable economic indicators since it is less prone to statistical adjustments and can be verified by cross-checking with China’s trade partners.
And imports in December rose six per cent year-over-year, after 0 per cent growth in November.
Based on today’s report, Bank of America’s Ting Lu says in a note to clients that both imports and exports have “bottomed out from their lows in mid-2012”. And while he maintains that the pace of export growth is likely to stay at 7.9 per cent achieved in 2012, he thinks imports could rise to 11.5 per cent YoY in 2013, from 4.3 per cent in 2012.
“Regarding import growth, it could accelerate quite a lot on robust domestic demand and rising commodity prices,” according to Ting.
What’s more? He points out that December’s import data shows that growth of ordinary imports, an indicator of domestic demand, improved to -0.6% yoy in Dec from -7.9% in November.
Of course this is one piece in a much larger picture on the overall health of the Chinese economy, but it’s one for China bears to watch.