Bad news for anyone holding out for an export recovery. Exports fell 23% year-on-year in July, a steeper fall than the 21.4% drop in June. If news of falling exports sounds familiar, it’s because this was the ninth consecutive month of declines. Imports were also down, by 14.9% year-on-year, although China in July bought a record amount of iron ore and oil from overseas. Oil imports were up 18% in July, while iron ore purchases increased 5% thanks to higher industrial output linked to stimulus spending. Higher output, that is, but not as high as some had hoped. Industrial production rose 10.8% in July, lower than many had expected. The markets didn’t seem to mind the industrial figures too much, though, as they rose slightly following four days of declines. One market winner was China Eastern Airlines; its shares rose 1.7% on news that the carrier had posted a US$144 million profit in the first half thanks to fuel hedging gains.
Meanwhile, Canadian Finance Minister Jim Flaherty is in China, and took some time to meet with China Investment Corp (CIC) Chairman Lou Jiwei. Flaherty said CIC would encounter no obstacles in pursuing Canadian investments, potentially in resource, manufacturing and infrastructure companies. It’s an interesting contrast with the China-Australia relationship, which received a new stressor yesterday thanks to the formal charging of detained Rio Tinto employees with trade secret infringement and commercial bribery.