Tracking China’s economy and commodity needs is getting harder

Gavin Maguire

Until 2020, commodities traders and economists needed only a handful of data points to gauge the health and direction of China’s economy, and the volumes of raw materials needed to fuel the world’s largest trading partner and goods producer.

But over the past five years, the make-up of China’s economy has shifted from being mainly reliant on construction and heavy industry to being driven more by goods manufacturing and services that are far less materials and energy-intensive.

Here’s a guide to the key old and new-ish data points needed to keep a read on the world’s second-largest economy, and how Beijing’s latest push to boost domestic consumption may have global repercussions.

Old timers

In the good old days, commodity traders needed only a quick glance at China’s imports of crude oil and iron ore to discern the health of its overall economy.

For most of the current century, the import trends of both of those commodities climbed steadily to sequential records, and acted as a leading indicator of the appetite of the country’s transportation, industrial and construction sectors.

Within the current decade, however, two important trends have collided to render oil and iron ore import data significantly less pertinent: the electrification of China’s vehicle fleets and the debt crisis within its property sector.

Electric vehicles have jumped from a 1% share of China’s car sales in 2015 to a 40% share in 2024, International Energy Agency data shows, heavily denting fuel demand in the process.

China’s massive property sector once accounted for as much as a quarter of its total economy, while the makers of steel, cement, ceramics, glass, wiring and plumbing materials all relied on it for sales of their products and services.

So far this decade, however, a series of debt defaults by major construction firms has chilled the broader property sector, sending home prices lower and stalling construction.

This in turn has stifled China’s demand for iron ore – a critical steelmaking ingredient – and made iron ore trade volumes a less reliable indicator of China’s overall economy.

China’s output of cement, crude steel, insulating glass and welded steel pipes has also trended lower since 2020 as the broader construction sector downshifted.

Data on China’s property sector has continued to trend lower in 2025, with prices, sales and investments all contracting in February.

On the up

While many of China’s construction sites have become ghost towns, production lines of electric vehicles, solar panels and rechargeable batteries have bustled, underscoring how manufacturing has now emerged as a key economic driver.

China’s production of key manufacturing-centric ingredients has also exploded, in contrast to the output trends of inputs used on building sites.

Output of copper, aluminum and ethylene – used on most production lines for appliances, cars, and tech gadgets – is at record highs, along with the output of sulphuric acid, used in metal refining.

To fuel the continuing rise in manufacturing activity, China’s output of power, electricity, power generating equipment and electric motors is also soaring.

Shipping out

China’s exports of key manufactured items have also scaled new highs within the past year, but may face stiffer headwinds going forward under the new tariff regime set by U.S. President Donald Trump.

Exports of EVs, rechargeable batteries, microchips and solar cells are all vulnerable to setbacks in 2025 if purchases around the world decline due to the higher costs triggered by the tariffs and the resulting reduced consumer demand.

At the heart of Trump’s tariff push is the United States’ persistent trade gap with China, which has been in deficit territory since the mid-1980s.

The deficit briefly narrowed in 2020 to the smallest in 14 years due to Trump’s earlier tariffs during his first term, and because of the steep drop in U.S. goods imports from China during the early lockdowns caused by COVID-19.

However, the monthly deficit has still averaged around $70 billion over the past two years, and remains a sore point within Trump’s second administration.

Just how China’s policymakers and businesses navigate the latest tariff landscape and adjust product output, export and import flows as a result will remain a key point of interest for commodity traders and economists in 2025 and beyond.

But accurately tracking those product flows and the impact thereof on the U.S.-China deficit requires more granular and different data points than the favored crude oil and iron ore import trends of yore.

(The author is a market analyst for Reuters)