From "First Substantial Fall in Iron Ore Imports in 2009" by Jing Ulrich, J.P. Morgan chairman of China Equities, September 14:
Iron ore imports slipped 15% in August to 49.7 million tons. This deceleration occurred as a result of softer steel prices, rising inventories at ports and steel mills, and growing domestic iron ore output. The surge in iron ore prices earlier this year encouraged many domestic mines to resume production; domestic iron ore output increased 19% in August to 76.7 million tons. Meanwhile, China’s steel output increased 22% to a monthly record of 52.3 million tons in August… In a climate of softer steel prices, steel mills have been more inclined to draw down their iron ore inventories rather than importing. Overproduction is the main reason for the ~18% correction in spot steel prices during the past five weeks… Prices of iron ore and major steel products could stabilize in the near-term… Despite recent price weakness, the demand outlook for steel has improved as a result of recovery in the autos, appliance and infrastructure industries, declining housing inventory and medium to long-term capacity control policies. Private housing investment grew 34.9% y/y in August, from 19.6% in July. There are also some early signs of an improving outlook for exports as global steel consumption recovers. China’s August steel exports increased 15% from July’s level and the country turned into a net-exporter for the first time since February.
From "Who Will Spend and What to Spend On" by Shen Minggao and Ken Peng, Citigroup economists, September 3:
Coastal areas faced early pressure to stimulate consumption, while the rest of China is still keen to promote investment. We expect pro-consumption policies to first develop in the coastal regions in coming years. The ongoing global crisis has probably delayed China’s transition to a consumer economy. For the first half of this year, investment (capital formation), consumption, and net exports had contributed to 87.6%, 53.4% and -41%, respectively, of the 7.1% GDP growth. There is no doubt that China’s consumption-GDP ratio would dip further this year. But this only means that this ratio would bottom out later rather than earlier… Consumers have not benefited proportionately from China’s economic growth [and] underdeveloped provinces tend to have higher consumption shares. The link between the two is income share of GDP [which is] directly proportional to consumption’s share. This gap is clearly the result of government policies to aid lower-income populations. But it also suggests that the wealthier coastal regions would have much to gain from distributing more income and wealth to the household. Indeed, the coastal areas are seeing the first small gains in their income shares, while the relatively underdeveloped provinces are going through sharp declines in their income ratios, as they too begin to focus more on investment.