China PVC May13.pngQ1 data from Global Trade Information Services provides further evidence of the slowdown underway in China. As the chart shows, the dramatic drop in net PVC imports suggests the new leadership are determined to burst the house price bubble they inherited:

• Imports (red column) were down a startling 98% versus Q1 2011 (blue)
• NEA imports were down 29%, NAFTA down 24% and Europe down 63%
• SEA saw its net export position replaced by imports
• The FSU also saw imports from China up 97%

Similarly US exports dropped 31% versus 2012, reversing the previous trend of volume gains due to shale gas cost advantage.

PVC is thus reinforcing the message given by the head of China’s central bank, Zhou Xiaochuan, who emphasised last month that:

“China is undergoing economic restructuring, which sometimes is not in lockstep with growth. We need to sacrifice short-term growth for the purposes of reforms and structural adjustments.”

It is giving a clear warning that China’s economy may well be following the pattern of 1993, as its leaders crack down on corruption and housing markets.