Click on charts to enlarge, courtesy of Nomura.
For China the Fed' s QE2 works definitely ....
Import growth also surged by an even more impressive 51.0% y-o-y (10.8% m-o-m, seasonally adjusted), the highest level in 13 months, from 25.6% in December, also far exceeding expectations (Consensus: 27.0%; Nomura: 38.0%). In our view, while there was probably some front-loading of imports ahead of the holidays, the surge also reflected prices of commodities on the global market (lifting the cost per unit of China’s imports); strengthening growth momentum in domestic demand; and companies responding to rising international commodities prices (and expectations that they will continue to rise) by building-up raw material inventories. On commodities, import growth in value terms in most categories was much higher than in volume terms, as evidenced by soybeans (value growth of 51.7% and volume growth of 26.0% y-o-y), iron ore (145.7% and 47.9% y-o-y) and crude steel (204.0% and 126.5% y-o-y). Supporting our inventory build-up hypothesis, import volume growth of several raw materials surged, including crude steel (126.5%), iron ore (47.9% y-o-y), paper pulp (29.2%), crude oil (27.4%) and copper (24.7%). Supporting our hypothesis of strengthening domestic demand absorbing more imports, ordinary goods imports – that is, imports catered for domestic demand rather than being used in the production process to make finished goods to export – grew 55.5% y-o-y to USD84.9bn – much faster than imports of processing trade (39.7% y-o-y; USD37.6bn).
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