The report highlighted this week is an IMF Working Paper prepared by Joong Shik Kang and Wei Liao dated May 2016. At that time slowing Chinese imports were an especially hot topic for commodity and raw material exporters; but the paper still has relevance, and for all of us today.
The researchers conclude weaker investment accounted for 40~50% of the import slowdown since 2014. Weaker exports accounted for around another 40% of the slowdown with the exchange rate perhaps having a bearing on a quarter of these.
Onshoring is a factor; but this has been going on for some time, as you can see in this chart extracted from the paper.
As investment has been falling due to the ongoing re-balancing of the economy the paper highlights the effect of this may be just one of several factors at work; but this is probably the single most important.
The domestic economy appears today to be regaining some poise as does global demand. However, the paper appears to conclude, with the profound structural changes taking place in China don’t expect former import patterns to be recovered to, probably ever.
You can access the work in full via this link Chinese Imports: What’s Behind the Slowdown?
Happy Sunday.