There is a great deal of focus this morning on China's import growth in June. The expectations were 10.9% YOY growth, but the actual number came in at 6.3%.
|China import growth YOY|
NYT: - Chinese imports rose in June at only half the pace expected, government data showed Tuesday, suggesting the need for Beijing to do more to increase growth and stoking anxiety about the strength of domestic demand.But there is another factor at play here. A big component of the decline came from crude oil imports. And since we are looking at the dollar price of imports, the recent price correction in crude oil lowered the overall amount of cash spent on fuel. The discount in crude prices for China was particularly steep as it bought Iranian oil. With China and India being the only major buyers of Iranian crude, the purchases were done below market levels.
|Source: ISI Group|
Clearly China bought less "stuff" last month, but buying it cheaper also contributed to the decline in import growth.