SINGAPORE: There are two ways of looking at China's robust trade data for July; either it's confirmation that the world's biggest commodity user is on track for a soft landing, or the numbers are a history lesson and the real challenge will come as the global economy slows. There is merit in both positions, but the first is based on hard evidence and the second on fears about what may happen. What the numbers show is that China's economy appears quite robust and its appetite for commodities remains undimmed. Gains of 9.5 percent in copper imports in July over June, 9.2 percent in aluminium and 6.8 percent in iron ore speak volumes about China's economic situation, and should be enough to ease fears of a hard landing, at least for now. The weak link in the July data was crude oil imports, which hit a one-year low of 4.58 million barrels a day in July, representing growth in annual terms of only 2.5 percent. There was slightly better news when looking at implied oil demand, which rose 7.7 per cent in July from a year earlier to 9.01 million barrels of oil a day. This is calculated by using refinery throughput and net imports of refined products, and the July number, while higher than that in June, is still well off the peak of 9.6 million barrels a day in December last year. The July crude import numbers were a tad disappointing as refineries returned from maintenance and expectations were that this would boost demand. However, cargoes for July delivery would have been booked in late April or early May, just around the time that crude was at its highest prices for the year. New York crude peaked at $114.83 a barrel on May 2, and if the Chinese have shown us anything, it's that they are price sensitive buyers. It's more likely that they have been eating into inventories in the past couple of months rather than pay elevated prices for oil. This makes it more likely that the recent price declines will tempt Chinese refiners to buy again, although this is more likely to show up in September trade data rather than in August. It's also probably the same for metals -- the recent price declines will stoke China's appetite to import, especially if domestic stockpiles have been run down in the first half of the year. The recent sell off in commodities will also help inflationary pressures ease, and not just in China. The country's top economic planner says prices have probably peaked and should ease in coming months, with the risk that further quantitative easing in the United States could re-ignite commodity prices. China's consumer price index rose to 6.5 percent in July, but it has still been driven mainly by food prices, which are expected to moderate over the rest of the year. Underlying inflation at around 2.5 percent isn't a threat to China's economic growth, and given the uncertainty now roiling the global economy, it's almost a sure bet that China won't be tightening monetary policy again any time soon. All this bodes well for China's hopes for a soft landing, where overall growth steadies around 8 to 9 percent. Of course, China doesn't exist in a vacuum, and the fears of renewed recession amid fiscal austerity in the United States and Europe could well alter the rosy picture. Slower growth in the developed world will no doubt be a headwind for China, but so far the signs are that it can cope with this by keeping domestic demand healthy and by ramping up infrastructure and social housing spending. But it would probably need a full-blown recession in Europe and the United States to knock China off track, and while there are now worries about the strength of the recovery in the West, a return to recession isn't the base case scenario.

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