Is China’s Inflow of Commodity Imports Sustainable?
Is the inflow of commodity imports into China sustainable? If not, then commodity prices are likely to drop down again and the recovery phase will be prolonged. The Chinese government, like many others around the world, has initiated a massive infrastructure spending program. If that is what is driving the raw material imports, then the demand is more secure. But if it is mainly speculation and stockpiling, then the outcome is less certain. In the second event, Chinese domestic consumer demand becomes the issue. The Chinese government has “requested” (i.e. ordered) that the banking system expand its lending. One result has been that new car sales in China over the last several months have led the world, taking over the number one spot from the U.S., where the recession has rendered the market historically depressed. Wireless internet orders in China, as well as in India, are also outpacing everywhere else in the world. China’s domestic demand is on the march forward and, backstopped by
