Exports down, investment up

Just in time for the weekend, the National Bureau of Statistics has given us all some tasty numbers to stew over. The news, it seems, is decidedly mixed. On the one hand, exports fell 26.4% in May, the worst fall ever, as imports dropped 25.2%. On the other hand, fixed-asset investment is way up, to the tune of 40% in May. Some observers say that the good of the investment numbers outweighs the bad of the trade, but it’s hard not to wonder if China is simply falling back on its traditional (and arguably unsustainable) growth-through-investment formula. Certainly, the export figures serve to confirm, if anyone was still doubting, that China needs to find a domestic cure for its ailments. There are signs of hope – the property market saw improvement in May – but there’s a long way yet to go. Also looking for a domestic solution is Shenhua Group, China’s largest coal producer. It is investing more than US$58.53 billion over 10 years to develop coal-to-liquid facilities, which may help China to reduce its dependence on foreign oil. In other areas, particularly minerals, China remains tied to imports. Guangdong Foreign Trade Group became the latest Chinese firm to invest in a foreign miner with the announcement that it will buy a 15% stake in Australian copper and zinc miner Kagara. China Minmetals, by the way, finally got its way: OZ Minerals’ shareholders approved its US$1.39 billion bid for the majority of the Australian miner’s assets.