China’s GDP increased 6.0% in Q4 2019, official data showed in mid-January, in line with expectations of market analysts and unchanged from the previous quarter’s pace. Facing sluggish demand at home and abroad as well as U.S. trade pressure (before the Phase One economic and trade agreement was signed in January 2020), Chinese policymakers have been rolling out a stream of growth boosting measures over the past two years in an effort to contain financial and debt risks. The world’s second-largest economy grew 6.1% in 2019, the slowest in 29 years, but still within the government’s target of 6-6.5%.
The Caixin China General Manufacturing PMI, an important indicator of the strength of the Chinese economy, stood at 51.5 in December, slightly down from 51.8 in the previous month. The recent data indicated a moderate expansion of the manufacturing sector. According to Caixin’s press release on the December PMI Index, although the rate of new order growth eased to a three-month low and export sales rose only slightly, the overall health of China’s manufacturing sector continued to improve.
2020 Economic Outlook
Economist Intelligence Unit (EIU), under the Economist Group, forecasted that real GDP will expand 5.9% in 2020 — a rate just strong enough for China to meet its political goal of doubling real GDP between 2010 and 2020. However, business conditions on the ground are unlikely to be as good as headline GDP data in 2020. This is because the importance attached to meeting this political target leaves economic figures susceptible to manipulation.
The Construction Sector
Home prices in 70 major Chinese cities remained generally stable in December 2019. Kong Peng, chief statistician with the National Bureau of Statsitics, said the real estate market maintained its steady trend in December as local governments have reiterated that “housing is for living in, not for speculation,” along with implementation of a long-term management mechanism for the market, according to a recent report by Xinhua News, China’s state-owned news agency.
Total investment in the real estate sector in 2019 increased 9.9 percent year-on-year. Total floor area completed in Q3 was at 866 million m2, up 14.4 percent compared to Q2, but still below the same periods in 2018 (883 million m2).
CAD/CNY further edged down in Q4 2019 compared to the preivous period, but still higher then the levels at the beginning of the year. The currency ended at 5.3636 on December 31, 2019.
China Wood Imports (cited from China Bulletin)
Softwood log inventories at China’s main ocean ports totaled 3.7 million m3 at the end of December 2019, an increase of 6.5 percent from the previous month. Radiata pine log inventories recorded a decline of 2 percent for the month. December’s European spruce log inventory was 770,000 m3, up 27.7 percent from the previous month. Inventories at the Taixing port jumped rapidly, moving from 60,000 m3 in November to 180,000 m3 by the end of Decmeber.
Softwood lumber stocks in the Taicang port and the surrounding area were at 1.06 million m3 in mid-December 2019, a large decrease of 21,000 m3 (down 16.5 percent) from November. Stocks of SPF lumber were 180,000 m3, a major decline of 28 percent from November. Meanwhile, softwood lumber inverntories at the Tianjin port were nealry 150,000 m3, down 20,000 m3 from November.