It Looks Like China Is Also Overstating Exports To Australia

We have already written briefly about how the figures for China’s exports to the European Union were overstated relative to EU imports from China, and export growth has been overstated recently relatively EU’s imports growth from China.. 

We speculated that China is probably massaging the numbers so as to look less bad, just as many other weird-looking data points coming out from China.

Barclays Capital looked at Australia’s exports to China relatively to China’s imports from Australia.  They are, of course, not meant to match one another perfectly, but the numbers for China’s imports from Australia appeared to have overstated, while the growth rates do not seem to match very well:


Source: Barclays Capital

There is one thing, however, that the Chinese and Australian data seem to agree according to Barclays Capital: iron ore.  In terms of volume, the time series of China’s imports of Australian iron ore seem to line up rather well with Australia’s exports of iron ore to China in terms of level, and growth rates seem to match better.


Source: Barclays Capital

And so far, both time series point to demand for iron ore from China in terms of volume holding up for the time being, although export price has fallen from the peak. 

While it seems that Chinese demand for Australian iron ore is holding up, we find this rather curious.  Earlier this year, we posted that a video of ANZ’s economist Nicholas Zhu observing massive build-up of iron ore.  Data also show that iron ore inventory build-up in Chinese ports reached record high in the second half of last year, and has not really gone down since then (see the chart below).  Not to mention that we have seen struggling steelmakers and steel traders as demand for steel falls.  All these do not seem to point to stable demand for iron ore in the long run.



Source: Bloomberg

This article originally appeared here: More on the inaccuracy of China’s trade data and demand for Australian iron ore
Also sprach Analyst – World & China Economy, Global Finance, Real Estate

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