China Economy, Construction & Lumber Shipments
February economic highlights:
- China has lowered its expectation for economic growth to around 6.5% in 2017 which is still in line with analyst predictions.
- The budget deficit target is at 3% of GDP in 2017, while the target for China Consumer Price Index (CPI) is around 3% and M2 growth target is around 12%[i].
- The government intends to eliminate tens of millions of tons of excess capacity in coal and steel industries which would put hundreds of thousands of workers out of work.
- Analysts doubt 2017 can match 2016’s economic growth. For instance, exports will not grow significantly and currency depreciation are expected to be offset by rising wages[ii].
The Chinese government is targeting a 6.5% growth rate in 2017.[iii] The Economist Intelligence Unit pegs its GDP growth forecast at around 6.4%; they predict that there will be high spending on infrastructure, property sector slowdown and tighter monetary policy.[iv]
Caixin PMI decreased from 51.9% in December to 51.0%[v] in January which is still higher than most months in 2016, except October (51.2%). Exports value dropped from USD 209 billion[vi] in December to USD 182 billion in January which is now lower than the average value (USD 189 billion) since July 2016.
China Consumer Price Index (CPI) increased from 102.1(December) to 102.5 (January)[vii] Index Points which marks the highest rate since February 2016. USD/CNY decreased slightly but consistently from 6.94 (January 1st) to 6.88 (January 30th) to 6.88 (February 1st) to 6.87 (February 28th)[viii]; CAD/CNY on the other hand fluctuated from 5.17 (January 1st) to 5.28 (January 30th) to 5.27 (February 1st) to 5.16 (February 28th)[ix].
Building material prices
Regarding common building material prices, price for cement in China declined 0.68% from RMB 293.50 per metric ton on February 1st to RMB 291.50 per metric ton on February 28th [x]; rebar steel was worth RMB 3,219.33 per metric ton on February 1st and then increased dramatically by 15.50% to RMB 3,704.00 per metric ton on February 28th [xi].
Wood Export to China
- China’s log imports in January 2017 reached 4 million m3 with 9.24% growth year-on-year but decreased 2.77% from December 2016. The import volume of softwood log constituted 66.3% of the total with 2.61% decline year-on-year[xii].
- The average price of imported logs in January was USD 168.36/m3 with 1.13% decline year-on-year and 1.74% decline month-on-month[xiii].
- China’s lumber imports in January 2017 reached 2.39 million m3 with 7.92% growth year-on-year. However the volume dropped dramatically by 19.55% compared to December 2016. In the same month softwood lumber imports contributed 72.13% of the total with 4.51% growth year-on-year[xiv].
- The average price of imported lumber in January was USD 250.14/ m3 with 3.02% decline year-on-year and 6.09% decline month-on-month[xv].
[i] Reuters with CNBC(March 4th, 2017). China aims for around 6.5 percent economic growth in 2017
[iii] Reuters with CNBC(March 4th, 2017). China aims for around 6.5 percent economic growth in 2017
[iv] Tom Rafferty. “Politics trumps all: Outlook for reform and growth in China in 2017”. Asia Regional Strategic Forecast 2017 (March 9th 2017), Economist Corporate Network, Shanghai, China.
[xii] BOABC (February 2017). China Wood and Its Products Market Monthly Report
[xiii] BOABC (February 2017). China Wood and Its Products Market Monthly Report
[xiv] BOABC (February 2017). China Wood and Its Products Market Monthly Report
[xv] BOABC (February 2017). China Wood and Its Products Market Monthly Report