[EdwinSm]

The follow article about an abrupt slow down of exports from China raises the question of
* whether this is just a one off event over the Chinese New Year?
* or is it a sign that the West can no longer afford to buy so much from China?
* or is China no longer cheap enough for the Western customer?

China's monthly trade data shows exports fell in March from a year ago by 14.6% in yuan terms, compared to expectations for a rise of more than 8%.

Imports meanwhile fell 12.3% in yuan terms compared to forecasts for a fall of more than 11%.

The numbers mean the country's monthly trade surplus has shrunk to its smallest in 13 months.

China's economy grew by 7.4% in 2014, its weakest for almost 25 years.

Analysts said recent indicators showed further signs the slowdown is continuing.

In US dollar terms, China's exports for the month fell 15%, while imports fell 12.7%.

Currency conversion factors based on US dollar and Chinese yuan movements over the last year mean some official numbers from the mainland are now reported in both currencies.

The official March data leaves the country with a monthly trade surplus of 18.16bn Chinese yuan ($2.92bn; £1.99bn).

In February, China's monthly trade surplus hit a record $60.6bn, as exports grew and imports slid back.

Analysts said the export numbers for March were a surprise.

"We can understand the imports fell because of falling imports of commodities, but exports fell so much, it was very much unexpected," said Shanghai-based analyst Nie Wen from Hwabao Trust.

However, he said one major reason for the falling exports was yuan appreciation.

Tony Nash, head of Delta Economics, said the numbers took in the lunar new year period which was typically a bit volatile.

"We usually average February and March to get a true picture of what's actually happening," he told the BBC.

"If we look at February's 48% rise in exports and March's 15% fall in exports, we get a moving average of 16.7%, which is closer to where we've seen exports over the past two months."
....

http://www.bbc.com/news/business-32281957

[dolanbaker]

The simplest answer it that we've OD'd on consumer junk, there's only so many gadgets we can buy, even with their "limited lives(by design)". The rest of the world hasn't grown fast enough to soak up the excess production.

[americandream]

Just a cyclical event. China is ensconced in the global capital market which is as of now, still new territory for consumerism.

[kiwichick]

just another reminder that we do, in fact, live on a finite planet

and the limits to growth are very real

[americandream]

just another reminder that we do, in fact, live on a finite planet

and the limits to growth are very real

Translating that into a circular set of global social relations is the trick, however.

[onlooker]

Just a cyclical event. China is ensconced in the global capital market which is as of now, still new territory for consumerism.

Yes if one reads the article is states that China's currency has appreciated so this in itself would slow down exports. China has gotten stronger economically which could be a factor in it's currency appreciation.

[dolanbaker]

Just a cyclical event. China is ensconced in the global capital market which is as of now, still new territory for consumerism.

Yes if one reads the article is states that China's currency has appreciated so this in itself would slow down exports. China has gotten stronger economically which could be a factor in it's currency appreciation.

A quick glance at the 12 month USD YUAN rate shows little change over the year.
excuse the crap formatting.

Code: Select all

$1 buys   change %            52 wk-h    52 wk-l
   6.19800    +0.00300 +0.05 6.27450    6.11100    

Different story for people who live with currencies that have lost value to the USD though.

[onlooker]

just posting this article about consumerism in China, it is from the end of 2013. It shows how since about 2008 consumerism has really taken off in China. It has been a slow process via time, as Chinese are conditioned to save by tradition and practical considerations of generations of poverty. That all seems to be changing now, look at their voracious car buying and also even I saw recently penchant for luxury items. Here is link
http://translate.chineseconnects.com/co ... -in-china/
I think it is the inevitable byproduct of becoming such an economic powerhouse.

[AgentR11]

Yes if one reads the article is states that China's currency has appreciated so this in itself would slow down exports. China has gotten stronger economically which could be a factor in it's currency appreciation.

It has appreciated slowly over time... because for the longest time the ruthlessly suppressed its value in order to drive their export economy. Transitioning to a consumption, domestic economy is hard and slow, and they can't just take the rails off their currency suddenly, as they don't have a background export of some high volume, excess natural resource. Maybe another ten years or so and they'll be able to let it float wherever the market dictates.

[EdwinSm]

Another month and another fall in trade to and from China.

In terms of adjusting to Peak Oil (when ever it will happen) trade will have to shrink, so this could be either bad or good news. Bad news if it is an indication of the effects of PO, or Good news is trade is shrinking before PO so there will be less of crash when it happens.

I note the imports to China are down by far more than the drop in exports. The article points to local demand (as in building), but I wonder if this is a fore taste of a greater decline in exports from China.

It seems the "experts" got their estimates monthly figures about as wrong as the pollsters were regarding the UK election.

China's monthly trade data has shown exports fell in April from a year ago by 6.2% in yuan terms compared to expectations for a rise of about 1.5%.

Imports also fell for the month by 16.1% in yuan terms compared to forecasts for a fall of about 12%.

The numbers mean the country's trade surplus has risen to 210.2 billion yuan from 18.6bn yuan in March.

Recent economic data from the mainland has shown further signs that China's slowdown is continuing.

"[The surplus rise] was mainly due to further import weakness," said Moody's analysts Alistair Chan in a note.

"Imports have slowed on account of the housing slump and reduced demand for commodities, while exports have been softened on account of the uneven global recovery," he said....

In US dollar terms, China's exports for the month fell 6.4%, while imports fell 16.2%, and the trade surplus rose to $34.13bn.....

http://www.bbc.com/news/business-32639974

[ROCKMAN]

Characterization of Chinese exports as "junk" doesn't hold much water these days: Primary exports - commodities: electrical and other machinery, including data processing equipment, apparel, radio telephone handsets, textiles, integrated circuits. And another comparison to the US from EconomyWatch:

China is the world’s second largest trading nation behind the US – leading the world in exports and coming in second for imports. From 2009-2011 its trade to GDP ratio was 53.1 percent, while its trade per capita was $2,413. Since its accession into the WTO in 2001, China‘s share in global trade has doubled – accounting for 10.38 percent of the world’s merchandise trade exports and 9.43 percent of merchandise trade imports. For many countries around the world, China is rapidly becoming their most important bilateral trade partner. In 2011, they were the largest exporting/importing partner for 32 and 34 countries respectively. However, there have been concerns over large trade imbalances between China and the rest of the world. The US in particular has the largest trade deficit in the world with China at $315 billion, more than three times what it was a decade ago.

And the decline in Chinese exports: how much is actually intentional and the result of developing govt policies: “Domestically, the Chinese government has been keen to reduce the economy’s reliance on exports and focus on internal consumption. In March 2013, China’s new leadership announced that they would move to recalibrate the economy, acknowledging that there is a “growing conflict between downward pressure on economic growth and excess production capacity.”

And another interesting metric I stumbled across: GDP based upon PPP: A purchasing power parity (PPP) between two countries, A and B, is the ratio of the number of units of country A’s currency needed to purchase in country A the same quantity of a specific good or service as one unit of country B’s currency will purchase in country B. PPPs can be expressed in the currency of either of the countries. In practice, they are usually computed among large numbers of countries and expressed in terms of a single currency, with the U.S. dollar (US$) most commonly used as the base or “numeraire” currency" - Global Purchasing Power Parities and Real Expenditures. 2005 International Comparison Program. The World Bank.

So the Chinese PPP is $18,976 billion vs the US PPP of $18,125 billion. Which, if I understand the metric correctly, implies a significant potential for the internal consumption of Chinese GPD and thus decreasing dependency on exports…the stated goal of the Chinese govt. BTW current GDP comparison: China – $11.212 billion and the US -$18,125 billion. And GPD growth rate (2014): China – 7.4% and the US – 2.4%...slightly behind Somalia at 2.5% and slightly ahead of Lebanon at 2.3%.

As Mark Twain might say: The rumors of China’s death are a bit exaggerated.

[dolanbaker]

Characterization of Chinese exports as "junk" doesn't hold much water these days

Very true, just consider the "crappy little toys" given away with junk food! They are actually quite well made due to the regulations around toys for small children, if the market demands cheap stuff, they'll supply it even if it costs more to make it have such a short life. Countdown to death chips in printers spring to mind.

[GoghGoner]

China may still be growing but they are using drastically less resources now as opposed when they were growing at a faster rate. So the China slowdown has caused commodity prices to crater which started in 2011.

It interesting to see the fallout from their slowdown. Yes, other factors are at play for US coal companies but if China was growing at 15% they would have no problem eating all of the coal the world could provide. Instead two of the biggest US coal companies are on their way to getting delisted.

http://finance.yahoo.com/q/is?s=ACI&annual

[ROCKMAN]

Goner - "So the China slowdown has caused commodity prices to crater which started in 2011." which might cause one to think the Chinese govt might have played some ole in causing the slow down. Growth is nice but if it's causing a surge in prices then that high growth rate might not be the plus many folks consider it to be if it also brings with it significant inflation. Especially inflation of imported energy.

IOW: what's better for the Chinese economy: a 7.4 GDP growth rate with $60/bbl oil and cheaper coal or a 10.5% GDP GR with $110/bbl oil and coal costing 50% more?

[dolanbaker]

China's yuan may get reserve status this year
http://www.bbc.com/news/business-32908835
28 May 2015 Last updated at 05:07 BST

China's currency may become a global reserve currency this year.

The International Monetary Fund hinted that the promotion could happen when it said this week that it does not consider the yuan undervalued.

The final decision will be taken at an IMF meeting in October.

The move would mean the yuan joins an elite group of currencies including the US dollar, euro, pound and Japanese yen.

Claudio Piron, currency strategist at Bank of America Merrill Lynch, explained to Leisha Chi what the promotion would mean.

Looks like China will soon be on the bankers "top table".

[EdwinSm]

Third month in a row of falling exports from China. Three months looks more than just a temporary blip.

With their imports falling really fast should we be looking of a global slow down? I read somewhere that some of the trade fall in East Asia is due to China making more components themselves instead of importing parts and just assembling them so a fall in Chinese imports might not mean there are less widgets on the market.

Exports in the world's second largest economy, China, fell for a third consecutive month in May, highlighting slowing demand in the country.

Exports fell 2.5% from a year ago in dollar denominated terms, and 2.8% in yuan denominated figures.

Both figures were above expectations, but the slide in imports has sparked worries on the domestic end.

Imports tumbled 17.6% in dollar terms, while yuan-denominated imports plunged 18.1% - falling for the seventh month.....

http://www.bbc.com/news/business-33043999

[americandream]

China's yuan may get reserve status this year
http://www.bbc.com/news/business-32908835
28 May 2015 Last updated at 05:07 BST

China's currency may become a global reserve currency this year.

The International Monetary Fund hinted that the promotion could happen when it said this week that it does not consider the yuan undervalued.

The final decision will be taken at an IMF meeting in October.

The move would mean the yuan joins an elite group of currencies including the US dollar, euro, pound and Japanese yen.

Claudio Piron, currency strategist at Bank of America Merrill Lynch, explained to Leisha Chi what the promotion would mean.

Looks like China will soon be on the bankers "top table".

Facilitates more efficient consolidation.

This myth that bankers are evil racketeers is utter nonsense. They act according to socio economic conditioning as do you and the rest of us incidentally. Put that misguided notion to rest and recognise that conditioning that preaches the virtue of wealth, has certain outcomes, of which ethics is not one of them.

[dolanbaker]

Third month in a row of falling exports from China. Three months looks more than just a temporary blip.

With their imports falling really fast should we be looking of a global slow down? I read somewhere that some of the trade fall in East Asia is due to China making more components themselves instead of importing parts and just assembling them so a fall in Chinese imports might not mean there are less widgets on the market.

Exports in the world's second largest economy, China, fell for a third consecutive month in May, highlighting slowing demand in the country.

Exports fell 2.5% from a year ago in dollar denominated terms, and 2.8% in yuan denominated figures.

Both figures were above expectations, but the slide in imports has sparked worries on the domestic end.

Imports tumbled 17.6% in dollar terms, while yuan-denominated imports plunged 18.1% - falling for the seventh month.....

http://www.bbc.com/news/business-33043999

Those figures don't take into account the recent drop in value of most of the widest traded commodities, so it could be a case of $ value down but quantity up.

[ROCKMAN]

So China might be exporting less. The BBC has a different view:

http://www.bbc.com/news/business-31787698

And what is their current balance of trade: "China's monthly trade surplus hit a record $60.6 BILLION in February, as exports grew and imports slid back. Exports were up 48.3% year on year to $169.2 BILLION, and imports dropped by a fifth to $108.6 BILLION."

And if the world needs to worry about that how much should it worry about this fact:

The United States recorded a trade deficit of $40.9 BILLION in April of 2015. Balance of Trade in the United States averaged -$12.9 BILLION from 1950 until 2015, reaching an all time high of $1.9 BILLION in June of 1975 and a record low of -67.8 BILLION in August of 2006.

[americandream]

The continued drift of global finance into the Chinese blackhole will continue for the indefinite future. And why not? Why would US capital (or capital anywhere for that matter) continue to manufacture at home when Chinese labour provides a better return?

Are the middle classes expecting a free lunch whilst paying lip service to the virtues of free trade?