Canada Wood Today | The Canada Wood Group

China economy, construction & lumber shipments

Eric Wong

By Eric Wong

Managing Director, Canada Wood China

November 9, 2016


September economic highlights

  • China’s economy remained steady in September
  • Real estate investments up compared to same period last year
  • In September, China’s overall wood imports increased compared to the same period last year, but Canadian imports fell.

China economic overview

The Chinese GDP growth rate in Q3 2016 remained at 6.7%, meeting market expectations, which pegged GDP growth at 6.6%. Analysts believe steady growth was spurred by increased government spending (12.5% growth year-on-year), larger asset investments (8.2% growth year-on-year) and an increase in retail sales (10.7% growth year-on-year).[i]

China Caixin PMI increased to 51.2 in October 2016 compared to 50.1 in September, marking the fourth consecutive month of growth and the highest number since July 2014[ii]; this was also the fastest improvement since March 2011. The government’s official services PMI reached 54.0 in October, showing a steady increase compared to September (53.7) and August (53.5). It appears China’s economic performance is currently surpassing expectations.

exports-and-manufacturingChina exports declined 10% year-on-year to USD 184.51 billion[iii] and imports fell 1.9%; this set the September trade surplus at USD 41.99 million. In Yuan terms exports declined 5.6% compared to the same period last year and imports were up 2.2%. “Domestic demand is equally weak as global demand,” said Yifan Hu the chief investment officer at UBS Wealth Management, mentioned without the increase in the price of oil from USD 30 a barrel in September 2015 to USD 50 last month imports could be even weaker, and a small depreciation does not help China’s exports.[iv]

China’s September Consumer Price Index (CPI) bounced back to average levels at 101.90 Index Points after August (101.30), which marked the lowest in a year.

The USD exchange rate against the RMB decreased 0.08% to 6.7673 on November 4th 2016 from 6.7729 in the previous trading session. Overall USD/CNY increased steadily this year, starting from 6.58 (January) and decreased slowly to 6.47 (April) and then brought back to 6.77 (October)[v], it added 6.82% during the last year.[vi] On the other hand in 2016 CADCNY kicked off by 4.71 (January) and reached all the way to 5.16 (April) but then dropped almost continuously to 5.09 (July and August) and 5.05 (October)[vii].


The first three quarters of 2016 reached RMB 7,460 billion, marking a 5.8% growth (year-on-year) in real estate investments. Investments in residential were RMB 4,993 billion (+5.1% year-on-year), accounting for 66.9% of total real estate investments. In September 2016, RMB 1,021 billion was invested in national real estate industry including RMB 686 billion for residential sector.

Construction: floor area started 

construction-floor-areaFrom January to September 2016 floor area of newly built buildings (floor area started) reached 1.23 billion m2 (+6.8% year-on-year), of which 847 million m2 was in residential sector (+6.7% year-on-year).[viii] In the same period, total floor area of finished buildings grew to 571.12 million m2 (+12.1% year-on-year), of which 420.68 million m2 was in the residential sector (+11.3% growth year-on-year).

In September floor area of newly built buildings (floor area started) nationwide reached 158 million m2 including 111 million m2 for residential buildings. In the same month floor area of finished buildings nationwide increased to 65 million m2 including 48 million m2 for residential buildings.

Policy developments 

China’s housing frenzy is still on, concluded by Business Insider in September 2016. Even though 53.7% respondents in a survey conducted by People’s Bank of China believed home prices in China are “high and hard to accept” the percentage of residents willing to buy a place in the next three months still increased 1.3% from the third quarter and reached 16.3%.[ix] The property price of China’s 100 major cities rises 14% year-on-year which is above GDP growth or urban income growth in the past 12 months, not all of those cities have many new migrants to consume new housings either.[x]

China’s Central Economic Work Conference will hold a meeting in December 2016 to provide further signal of policy direction, may be an answer to the extent China can tolerate continuously rising housing prices. There might not be any major intervention in the property market in the next several months until the late 2017 when the 19th Party Congress Session begins. The plan drafted by policy makers from Beijing to expand investment channels to transfer investment away from property market may not work because hard correction could cause a major financial crisis. The Economist Intelligence Unit predicts China property market will grow much slower in 2018 declining to 4.2%.[xi]

Building material prices

Regarding common building materials, price for cement in China increased 2.32% from RMB 279.83 per metric ton on October 1st to RMB 286.33 per metric ton on October 31st [xii]; rebar steel was worth RMB 2,336 per metric ton on October 1st and then increased 4.08% to RMB 2,431.33 per metric ton on October 31st [xiii].


In September, China’s wood imports increased compared to the same period last year, including:

  • In September log imports were 4.26 million m3 (+15.41% year-on-year); the total for January to September was 36.59 m3, which marks a 6.95% increase compared to the same period last year.
  • September imports of lumber amounted to 2.53 million m3 (+17.4% year-on-year). Total imports of lumber January to September amounted to 23.73 million m3, marking a 19.43% increase compared to the same period last year. However, imports of Canadian softwood lumber are down 10.99%.[xiv]

demand-for-woodWOOD MARKETS predicts that the total volume of China softwood lumber imports will be 14,098,000 m3 in 2016 with 20.2% change YTD; 42.4% change YTD for Russian softwood lumber and -11.6% change YTD for Canadian softwood lumber. Regarding the price of SPF lumber (S4S, KD) CIF Taicang (Shanghai), #2 grade in 2X4 stays at $201/ m3 to $206/ m3 for over 4 months but Utility grade (#3) and #2 grade both in 2X6 increased $17/ m3 and $20/ m3 to $187/ m3 and $216/ m3 respectively dramatically in just one month.[xv]







[i] Trading Economics (October 2016). China GDP Annual Growth Rate

[ii] Trading Economics (October 2016). China Caixin Manufacturing PMI

[iii] Trading Economics (October 2016). China Exports

[iv] Leslie Shaffer (October 12th, 2016). China’s September exports and imports tumble amid weak demand, yuan decline.

[v] Finance Sina (October 2016). USDCNY

[vi] Trading Ecnomics (October 2016). Chinese Yuan

[vii] Finance Sina (October 2016). CADCNY

[viii] National Bureau of Statistics ( October 19th, 2016)

[ix] Business Insider (September 25th, 2016). China’s housing frenzy is still on.

[x] Economist Corporate Network 2016 (October, 2016). Up in the air, China’s property market

[xi] Economist Corporate Network 2016 (October, 2016). Up in the air, China’s property market

[xii] Sunsirs (October 2016). Spot Price: Monthly for Cement

[xiii] Sunsirs (October 2016). Spot Price: Monthly for Rebar

[xiv] BOABC (November 4th, 2016). China Wood and its products market monthly report Issue 213

[xv] WOOD MARKETS (October 2016). China Bulletin