China Economic Update

2018 Q4 highlights:

  • China’s economic growth edged down in Q4 2018 year-on-year due to weak investment and faltering consumer confidence, which led to the weakest annual growth in 2018 within the past 28 years; GDP in Q4 2018 grew 6.4 percent, compared to 6.5 percent in Q3, hitting a record low since the global financial crisis in September 2008.i
  • China’s economy grew at the slowest pace since 2009 due to financial deleveraging and a trade dispute with the United States. However, Q4 figures suggested a slow increase after government initiatives to shore up economic growth, and a buffer against a sharp slowdown with the country’s solid financial and fiscal status.ii

The PMI (Caixin) index dropped unexpectedly to 49.7 in December 2018 compared to 50.2 in the previous month, missing the market consensus of 50.1iii. China’s exports fell 4.4 percent year-on-year to USD $221.2 billion in December 2018 with a weakening demand in most of its major markets; the figure was below market consensus (up 3 percent) following a 5.4 percent increase the previous month.iv

The China Consumer Price Index (CPI) decreased to 101.9 in December 2018 from 102.2 month-to-month.v USD/CNY fluctuated in Q4 2018, with the exchange rate increasing from 6.87 (October 1) to 6.97 (November 1) and decreasing slightly to 6.95 on December 1;vi CAD/CNY was on a decreasing trend in Q4, from 5.35 (October 1) to 5.30 (November 1) and it continued to fall to 5.23 on December 1.vii

China’s Wood Importsviii

A total of 212 return-block trains of Russian lumber has been shipped to Chengdu since March 2018, according to Chengdu International Railway Port Investment and Development. Those block trains were imported to China through four China-Russia land ports: Erenhot, Alataw Pass, Manzhouli and Suifenhe.

Softwood lumber inventories at Taicang port and its surrounding area were 920,000 cubic metres in late December 2018, down 4 percent month-on-month. The figure represented the lowest volume of lumber inventory since February 2018.

Radiata pine log inventories from New Zealand and Australia totaled 1.65 million cubic metres in late December 2018, down 3.9 percent month-to-month. It accounted for more than 57 percent of the total log inventory.

i Kevin Yao (January 21, 2019). China’s economy cools in Q4
ii Focus Economics (January 21, 2019). China: Economic growth continues to decelerate in Q4
iii Trading Economics (January 20, 2019). China Caixin Manufacturing PMI
iv Trading Economics (January 20, 2019). China Exports
v Trading Economics (January 20, 2019). China Consumer Price Index (CPI)
vi XE Currency Charts: USD to CNY
vii XE Currency Charts: CAD to CNY
viii Wood Markets/FEA (January 2019). China Bulletin

SPF trial partner confirms order for second quarter

A Chinese manufacturer located in southern China’s Guangdong province that used Canadian softwood for a trial confirmed another order of 2,000 cubic metres of SPF in Q1 2019.

Before this, the manufacturer, purchased 3,000 cubic metres of SPF to make furniture and edge glued panels in Q4 2018.

The subsequent orders came after a product trial Canada Wood China (CW China) in August 2018. CW provided the company with 5.4 cubic metres of SPF J Grade, supplied by a major Canadian producer. CW China provided technical support on handling and processing SPF during the trial.

The manufacturer was pleased with the SPF-made furniture components compared to the stock sourced from Scandinavia. The production crew noted that SPF was relatively gentle on their equipment. They needed to sharpen planer knives less frequently, which increased running time and lowered costs.

CW China will showcase some of the SPF-made furniture at the Guangzhou Furniture Fair in March 2019. Photos of the demo furniture were shot in January 2019 for future promotion.

CW China Product Trial Program:
Canada Wood China has been providing SPF and Hemlock samples to furniture and door manufacturers who we believe could benefit from using Canadian softwoods. In return, these partners agree to undertake recovery and economic analytics with us to determine the viability of programs. Products produced from these programs can be used for display purposes at various trade shows and seminars throughout China.

China approves master plan for Xiongan New Area

China’s central authorities approved the 2018-2035 master plan for Xiongan New Area in early January 2019, stressing it’s a significant step in developing a high-quality city with a modern economic system, according to Xinhua News Agency, China’s state owned newswire.

Ecological protection is key for the Xiongan model. According to the master plan for Xiongan released in April 2018, by 2035, China aims to build Xiongan into a modern city that is green livable and smart, with harmony between human civilization and nature. By the mid-21st century, it is expected to provide a Chinese solution to “big city malaise”. The master plan is the fundamental guideline for the development, construction and management of Xiongan New Area and should be strictly implemented, according to the approval.

In April 2017, China announced the establishment of Xiongan New Area, spanning three counties in Hebei Province about 100 km southwest of downtown Beijing. Work has started on some projects in the area, including intercity railways between Beijing and Xiongan and afforestation. In addition, a public service centre has already opened.

In terms of construction, Xiongan will promote green buildings by using environmentally friendly and recyclable construction materials and applying energy saving technology through the entire process of design, construction and operation. Prefabrication will be encouraged.

Sino-Canadian Wood Construction Cultural Festival Kicks off

The first “Sino-Canadian Wood Construction Cultural Festival – Low-carbon Energy-saving Symposium” was held in Tianjin on October 31. It was cohosted by BSD-TEDA Investment Development Company and Canada Wood China.

Representatives from Canadian side: Ms. Mallika Bhatt, Director of the Innovation and Energy Technology Division of the Canadian Federal Ministry of Natural Resources, Mr. Matthew Pal, Second Secretary and Trade Commissioner of the Canadian Embassy in China, Eric Wong, Managing Director of Canada Wood China and representatives from Chinese side: Mr. Zhao Zhixiong, General Manager Beijing Science Development Co., Ltd., Mr. Wang Gang, Chairman of BSD-TEDA Development Co., Ltd. attended the festival opening. The participants witnessed the awarding ceremony to the first large-scale project – Banff Town which is applied with Canadian Super E® healthy housing certification system.

Guest speakers shared their presentations around “living innovation and low-carbon living life-style”. The cultural festival demonstrated the cooperation between China and Canada in the modern wood structure technology and Tianjin Eco-city project. It provided a platform to discuss the topic of environmental sustainable developments, low-carbon energy and to promote and demonstrate the achievements.

Located in the Binhai New Area, Tianjin Sino-Canadian Eco-district project is the first low-carbon ecological urban project in China, initiated by Ministry of Housing and Urban-Rural Development of China (MOHURD) and Natural Resources Canada.

Canada Wood partners with Canada Pavilion at CIIE

Canada Wood China presented in Canadian Pavilion in the first China International Import Expo (CIIE) held in Shanghai from November 5 to 10, 2018.

The CIIE is an echo to President Xi’s announcement at the Belt and Road Forum in May 2017. It is a significant move for the Chinese government to hold CIIE to give firm support to trade liberalization and economic globalization and actively open the Chinese market to the world. It facilitates countries and regions all over the world to strengthen economic cooperation and trade, and to promote global trade and world economic growth in order to make the world economy more open.

Canada was invited as one of the 12 guest countries that have the privilege to host the national pavilions inside the main hall. In order to bring out Canada’s unique diversity and identity, one that is unmistakably Canadian, the pavilion design team was inspired to incorporate wood elements after meeting with Canada Wood China’s staff.

“Canada’s overriding theme for its pavilion at the CIIE was ‘Canada: Part of Your Healthy Lifestyle.’ From the initial design stage, we realized that it was critical to reflect the use of wood as the healthiest construction system as well as the most appealing. Canada Wood as a key Partner in delivering Canada’s presence at CIIE helped realize this with several wood elements integrated”, said Fred Spoke, project manager of the Canada pavilion and former Canada Wood Managing Director.

Another highlight was the model of the UBC Brock Commons 18 Floor wood structure, the tallest in the world, Fred Spoke added.

The final product is intriguing, the wooden mountain backdrop inspired by the majestic Rocky Mountains and vast natural beauty of Canada, truly stood out from the surrounding pavilions.