Why am I not seeing anyone back out the implied growth rate from these numbers?

by on September 8, 2015 at 8:38 am in Current Affairs, Data Source, Economics | Permalink

The 13.8% decline in imports was significantly worse than consensus expectations for an 8.2% decline, and will only add to concerns over declining Chinese demand.

Under what required assumptions would this translate into a growth rate of say four percent?  Backward-looking?  Forward-looking?  Or is this just a slow structural shift as the Chinese economy gradually moves into services?  Inquiring minds wish to know.

The full report is here.

1 Sunil September 8, 2015 at 9:15 am

Because 4% difference of drop in imports (which make less than 20% of the economy) has an impact of .8% (approx) gain in GDP all other things remaining constant. Substantial but not in the same league as 4% impact on GDP.

2 vak September 8, 2015 at 9:58 am

The correct guess should be based on the statistical correlation/cointegration between monthly import numbers and quarterly GDP. I bet this, if maintained, changes the expected GDP numbers by more than 80 points.

3 DF September 8, 2015 at 10:57 am

Sunil, why such a narrow casual channel? If you think the only slowdown in the Chinese economy is happening in imports, you are in a very small minority.

4 Bill September 8, 2015 at 9:57 am

Are you sure about the math. The quote said “imports”, not exports. A decline in imports — factor inputs — is more likely correlated with domestic economic activity. On the other hand, oil prices declined, so unless you control for decline in imported commodity prices — copper, oil, etc. — you dont know whether you are tracking economic activity or just a collapse in commodity prices.

5 Bill September 8, 2015 at 9:57 am

This was in reply to Senil.

6 Kgaard September 8, 2015 at 11:14 am

Bill — Yes I have exactly the same take: The decline in imports is a crucial measure of economic activity — but how much of that decline is simply a function of lower commodity prices? Probably a very large amount given that so much of China’s economic activity exists at the low-intermediate level of the economic food chain (i.e. buying commodities and making stuff with them).

7 Evan Soltas September 8, 2015 at 9:58 am

For the US, real trade volumes (i.e., deflated imports plus exports) have been closely correlated with real GDP, with a slope of 1/4 — so that a 1% increase in real GDP corresponds to a 4% increase in real trade volumes.

Graph: https://research.stlouisfed.org/fred2/graph/?g=1MEh

I am not sure if the relationship is the same for China, but one could easily construct a synthetic control group using South Korea, Vietnam, Taiwan, etc. If you take the US relationship as true for China, here is what you get:


8 Marko September 8, 2015 at 1:34 pm

Unless I’m missing something , the multiplier should be more like 2 , rather than 4 :


You’ve added together the % increases in exports and imports when what you wanted is the % increase in ( exports + imports ) , correct?

9 E. Harding September 8, 2015 at 5:22 pm

Marko is right.

10 Evan Soltas September 8, 2015 at 9:20 pm

Coded it wrong on FRED. Thanks.

11 DF September 8, 2015 at 10:54 am

Tyler, I was hoping for the same analysis, but I guess it is hard to come by. Certainly regressing a volatile import series on a volatility-lacking GDP series is a bit too naive…

But I do think imports are what to watch to get any sense of domestic demand. There is trading partner data that keeps import data manipulation in check.

12 E. Harding September 8, 2015 at 1:01 pm

Or, alternatively:


PCE index is close to U.S. GDP deflator.

Apparently, WTO entry led to a huge boom in Chinese trade that petered out around April 2013.

13 E. Harding September 8, 2015 at 1:03 pm

Bah, this was supposed to be a reply to Soltas above.

14 Axa September 8, 2015 at 11:13 am


“Traders who import the metal use the commodity to secure loans from abroad. That trade, which allows people to take advantage of the fact that interest rates in China are higher than on the offshore loans, is a legal way to circumvent China’s capital controls. It has helped keep metal import volumes high even as China’s economic growth has slowed.”

“An estimated one-third or more of Chinese metal imports are believed to be used as collateral for loans from China’s “shadow banks,” a vast network of loosely regulated lenders.”

So, did the WSJ was right a year ago? That import bubble deflated and today the imports correspond to the actual volume of mineral required for industries?

15 Nathan W September 8, 2015 at 11:40 am

Chinese imports are largely as intermediates, no? I’m very unsure as to what this could mean for Chinese demand itself.

How much of this figure reflects declining PRICES of commodities? I think much stronger disaggregation in the import figures, as well as the provision of both volume and price figures, would be needed to be able to make much of the aggregate picture.

If Prada sales fall, then I would assume that the wealthiest families are experiencing a pinch. If iPhone sales fall, then perhaps the upper middle class is being more careful about spending. If prices of some famous brands of tea and baijiu fall, then perhaps large numbers of families are short on cash for gift spending.

Much like with US GDP figures, we might just have to wait until the retrospective figures come out.

16 Barkley Rosser September 8, 2015 at 1:46 pm

I have said this before here, but for what it is worth, Russian sources are apparently claiming that the Chinese GDP growth rate is in the 4-5% range, which is consistent with this post.

17 Kai September 8, 2015 at 1:53 pm

Commodity prices are way down. Therefore import volumes are down.

Consider the following highlights:-

1. oil is still cheap
2. iron ore (2nd most traded commodity and 66% of seaborne demand worldwide is imported by China) is down 30% in 2015
3. coal consumption has been falling down rapidly due to forceful implementation of anti-coal policies
4. other mineral commodities are also way down this year

Cheap commodities = moderate factor in pushing up GDP growth, not 4% growth

18 Duke of Qin September 8, 2015 at 1:54 pm

Disaggregate imports and pay attention to volumes in addition to yuan denominated values. Volumes have held steady or marginally increased while values have declined due to significant strengthening of the yuan vis-à-vis non dollar currencies coupled with commodity price retreats.

19 Tom Warner September 8, 2015 at 2:04 pm

If anyone is doing that analysis it would only be for clients, but might leak.

Anyone doing it would need to start from the detailed trade data, separating as much as possible volumes and prices. Chinese detailed data is timely but not free and somewhat unreliable. UN Comtrade data on exports from China’s trade partners is less timely and less complete but more reliable, except for HK.

Or for an easy rough proxy there’s the Dutch government’s World Trade Monitor, which estimates quarterly trade volumes for emerging Asia. That shows 0.4% growth of imports and 1.6% drop in exports in the second quarter vs the same quarter of previous year.

So the pain is more on the export side than import side, as you’d expect for a country propping up its currency.

20 Tom Warner September 8, 2015 at 2:06 pm

Actually the WTM also has monthly data on emerging Asia trade volumes, but the series is volatile so better to smooth it to at least quarterly.

21 Tom Warner September 9, 2015 at 3:10 am

Actually China customs freely gives out volume series for major commodity groups covering more than half of imports and more than a quarter of imports. Running those through a spreadsheet, weighting them by their 2014 contributions, I came up with 2.8% import volume growth and 0.4% export volume contraction in Jan-August, versus the same period last year. I’ll post more detail to my blog later.

22 Tom Warner September 9, 2015 at 3:11 am

oops, I meant more than a quarter of exports.

23 Nathan W September 9, 2015 at 6:02 am


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