Is it 2003 all over again? What is going on in China?

smaller than expected

was larger than expected

Export growth in January and February was 25.5%

“Much stronger construction growth fueling higher imports” is the story that Jonathan Anderson of UBS has been pushing in his client notes - and it certainly fits the January-February data far better than the “export growth slowdown” story that Andy Xie of Morgan Stanley has been pushing.

So doesn’t that solve the mystery?  We are witnessing a replay of 2003.  Strong money growth, strong lending growth, surging construction all lead to surging imports - keeping the China’s trade surplus from growing even as its exports explode.

Alas, Anderson changed his tune a bit today.  His construction index isn’t as strong as it was in the third quarter of 2005.    however, he argues other indicators don’t suggest a sharp fall-off in construction spending, only an end to the acceleration of last fall.

And a blow-out in spending is a bit at odds with still very subdued inflation number.

So I am confused.