Canada Wood Today | The Canada Wood Group

China Economy, Construction & Lumber Shipments

Eric Wong

By Eric Wong

Managing Director, Canada Wood China

July 26, 2017

2nd quarter highlights: 

  • GDP of 2nd quarter expanded 6.9% year-on-year
  • Industrial output was up 7.6% in June year-on-year which beat the estimated 6.5% increase
  • Fixed-asset investment rose 8.6% in the first half of this year which also surpassed the forecast of 8.5% gain
  • Retail sales climbed 11% in June year-on-year compared with a median estimate of 10.6% in a Bloomberg survey

China’s GDP grew 6.9% in the 2nd quarter which is the same figure compared to the previous quarter and slightly higher than most predictions and above Beijing’s stated growth target for year 2017. However, analysts forecasted this speedy growth will be difficult to maintain in the coming months as the government is now slowing down its rapidly ballooning debt.[i]The economic growth of 2nd quarter was partially driven by stronger exports and production especially steel; this growth also strengthened the economy to meet the growth target of year 2017 (6.5%) which would provide rooms for policymakers to defuse financial risks. In the meantime, the growth of the property sector has cooled this year, the growth of exports after several years of decline helps prevent the slowdown of China’s economy.[ii]

Caixin PMI indexes in the 2nd quarter were way lower than the 1st quarter where the figure in May hit the bottom (49.6) and the June figure (50.4) was only slightly higher than April (50.3).[iii] Exports value on the other hand was rising steady from USD 180.0 billion(April) to USD 196.6 billion (June) and reached the highest figure since this year.[iv]

China Consumer Price Index (CPI) kept a rising trend in the 2nd quarter started 101.2 in April which was already higher than both figures from February (100.8) and March (100.9) and up to 101.5 in both May and June.[v] USD/CNY kept steady at 6.89 on both April 1st and May 1st and then declined from 6.81 (June 1st) to 6.78 (June 30th)[vi]; CAD/CNY fluctuated from 5.17 (April 1st) to 5.04 (May 1st) to 5.05(June 1st) to 5.23(June 30th)[vii].

Building material prices

Regarding common building material prices, price for cement in China decreased 2.74% from RMB 316.00 per metric ton on June 1st to RMB 307.33 per metric ton on June 30th [viii]; rebar steel was worth RMB 3,693.12 per metric ton on June 1st and then dropped 2.91% to RMB 3,585.62 per metric ton on June 30th [ix].

Wood Export to China[x]

From January to May 2017 the forestry fixed asset investment worth RMB 73.18 billion which increased 11.8% year-on-year. During the same period China imported 3.5 million m3 of wood from Canada with 5.1% of overall growth year-on-year, log imports increased 49.4% year-on-year. Currently the main channel for China to import Canadian wood is by general trade and more than 50% of the import volume goes through Nanjing Customs to various regions in Jiangsu province. According to official statistics from January to May 2017 China imported 3.4 million m3 of wood from Canada by general trade which constitutes 97.5% compared to processing trade (1.1%) and bonded warehouses (1.4%).

[i] Rishi Lyengar (July 17th, 2017). China’s economic growth remains stable at 6.9% in the second quarter

[ii] Elias Glenn and Kevin Yao (July 17th, 2017). China’s strong second-quarter GDP growth paves way for deeper reforms

[iii] Trading Economics (July, 2017). China Caixin Manufacturing PMI

[iv] Trading Economics (July, 2017). China Exports

[v] Trading Economics (July,2017). China Consumer Price Index (CPI)

[vi] XE Currency Charts: USD to CNY

[vii] XE Currency Charts: CAD to CNY

[viii] Sunsirs (July 2017). Spot Price for Cement

[ix] Sunsirs (July 2017). Spot Price for Rebar Steel

[x] BOABC (April to June 2017). China Wood and Its Products Market Monthly Report