Gordon G. Chang, gloomy prognosticator on China, digs into trade numbers on copper and believes the Chinese are buying copper to gussy up their trade deficit numbers, rather than having a real need for the metal.
Buying more copper helps hide a yawning trade surplus that might cause trouble with the country's trading partners. China is expected to get new leadership this fall, and leaders want to keep the transition smooth.
Why? First, by then the slowdown in the economy will become evident, and stockpiling will no longer be able to mask the fact that imports, a proxy for domestic consumption and growth, are tumbling. Second, Chinese enterprises will run out of money to buy unneeded metal. Soon, China, which accounts for about 40% of global demand for copper, will not be able to support world prices by adding to its hoard.