Surging commodity imports 'do not point to' economic rebound

The surge in China's iron ore, crude oil and coal imports in the first nine months does not indicate that China's economy has rebounded, according to a spokesperson of the customs administration on Thursday at a news briefing.

"The Chinese economy is still facing downward pressure. The recent increase in bulk commodity imports does not mean that China has loosened its grip on overcapacity reduction," said Huang Songping, spokesperson for the customs administration.

The total iron ore imports in the first nine months were 763 million metric tons, up 9.13 percent year-on-year. In the same period, coal imports stood at 180 million tons, up 15.2 percent from the same time last year. Crude oil imports increased by 14 per-cent year-on-year to 284 mil-lion tons from January to September.

Huang said that China is still vigorously pursuing over-capacity reduction. Bulk commodity imports are affected by a lot of factors and therefore cannot be taken as the sole sign that the Chinese economy is about to register fast growth.

"For instance, the increase in crude oil imports is because of the decreasing domestic output, the low world oil prices and the fact that private companies have gained more import quotas," said Huang.

Lin Boqiang, director of the Energy Economics Research Center at Xiamen University, said that such a rise in raw materials is not sustainable because China's control on overcapacity is pretty tight.

"Some might be stocking up on bulk commodities, believing that the Chinese economy is warming up soon. For instance, power consumption in the first three quarters has been rising, which may be taken as a sign of economic recovery. Yet their speculation may lead to great losses because the real demand for power remains sluggish," said Lin.

Lin said that the power consumption increase is partly due to the government's efforts to promote clean energy, which has prompted consumers to turn to electricity from coal for energy.

Lin has estimated that the demand for coal may drop by 10 percent in the first nine months compared with the same period last year.

China's steel and coal industries have achieved more than 80 percent of the capacity reduction goal this year as of the end of September, according to Zhao Chenxin, spokesperson for the National Development and Reform Commission.

According to the China Association of Iron and Steel, the supply of iron ore out-strips the demand as the stock of iron ore remains high.

The statistics of CAIS show that pig iron output stood at 469 million tons in the first eight months, down 3.8 mil-lion tons from the same period last year. Imports of iron ore in the same period stood at 670 million tons, up 57 million tons from the same period last year, far exceeding the growth of pig iron output.

Contact the writers at yangziman@chinadaily.com.cn and zhongnan@chinadaily.com.cn