Before the three-day Dragon Boat Festival holiday sweeps over China starting tomorrow and spells an early break in the work week (workers are off Thursday, Friday, and Saturday, before going back to the office Sunday), economic planners must have been happy to release surprisingly good news today about imports in May.
Import growth was -0.4% last month, still negative, but more than six percentage points better than economists expected. The figure suggests the economy is picking up. Higher commodity prices influenced imports—oil prices, for instance, rose 12% in May from the month before—because their growth is measured in total value. But the rise was so dramatic that economists said rising volumes were part of the unexpected improvement.
In volume terms, growth of iron ore, coal, and crude oil all clocked in above 20%, compared to single-digit gains and losses in April. That suggests infrastructure building is driving the growth, an assumption borne out by recent plans from the Ministry of Transportations to invest $725 billion in infrastructure projects over the next two years.
At the same time, Chinese exports were as disappointing as the latest U.S. employment release.
Chinese export growth dropped to -4.1%, worse than the -1.8% in April, a decline that can likely be blamed on the lackluster economies of trading partners in Europe, the U.S., and Japan.
The export figure fell right in line with economists’ forecasts, and it was bad enough that expectations of continuing government support in the form of a weaker currency and low interest rates didn’t change.