China’s currency policy dilemma sharpened on Monday as the country announced a record January trade surplus in spite of falling exports and reported dismal imports in spite of a strong appreciation of the renminbi against the euro and yen.
Exports contracted 3.3 per cent year on year in January, down from an increase of 9.7 per cent in December. Meanwhile, imports also declined 19.9 per cent, falling from a 2.4 per cent contraction in December. This produced a record merchandise trade surplus of $60.0bn, up from $49.6b a month ago (see chart). Read more
This week, a trade war that was supposed to tear the world of high-tech manufacturing apart ended peacefully, quietly and with few casualties.
China announced plans that would comply with a WTO decision from last year by removing export quotas and other restrictions on rare earth elements (REEs), the minerals used widely in the manufacture of electronics, computers and cars. It was another success for the US, which has not only chalked up a series of impressive wins against China in the WTO’s dispute settlement process but also (by no means a given) often succeeded in getting Beijing to implement the decisions.
So, a big victory for global governance? Huzzah for the international rule of law, and a celebratory round of Dan Drezners?
By Andy Rothman, Matthews Asia
After two decades of 10 per cent GDP growth, followed by average growth of over 8 per cent, conventional wisdom is that China is on the verge of collapse. But that wisdom is based largely on many misunderstandings.
Let’s start with the consensus that China’s residential property market is about to replicate the U.S. housing crisis. But China has avoided most of the U.S. traps. For example, homeowner leverage is far lower in China than it was in the U.S. during the run-up to the crisis. By 2006, the National Association of Realtors reported that the median cash down payment for first-time homebuyers in the U.S. was only 2 per cent of the purchase price. In China, the minimum down payment is 30 per cent. Read more
A surge in fake invoicing is once again inflating China’s export figures, according to a survey, raising questions over a mysterious recent ballooning in Beijing’s trade surplus and suggesting that inflows of hot money may be rising.
A survey of executives at 200 export companies, trading firms and shipping agents in China in September revealed a spike in the number of respondents who think over-invoicing of exports is resurgent (see chart). The levels are reminiscent of late 2013, when hot money inflows prompted a managed depreciation of the renminbi. Read more
Japanese fast food lovers: Indonesian yakitori and chicken nuggets may be coming to a table near you soon as Southeast Asia’s biggest economy tries to take advantage of China’s latest food safety woes.
McDonald’s Japan stopped importing Chinese chicken in July, part of a broader backlash after a major Chinese supplier was accused of selling meat beyond its shelf-life. Read more
Emerging market (EM) economies are rebounding from an export malaise that has marred their fortunes since early 2012 and rendered several of them vulnerable to the tapering of US monetary stimulus.
So, is an EM export boom now once again in prospect?
The answer, say analysts, varies sharply according to which side of a stark dichotomy each emerging market falls. Manufacturing-led exporters, particularly in Asia, are riding a wave of resurgent demand from the US and Europe. But commodity-orientated exporters in Latin America and Africa are hurting from the slow expiration of the commodity supercycle. Read more
The nerdier parts of Washington DC have been riveted over the last week by a fight over one of the duller institutions in the city: the Exim Bank, the US’s export credit agency. The battle threatens the very existence, at least in its current form, of the agency that promotes US exports by insuring foreign buyers.
The battle is generally portrayed as a domestic ideological affair that pits true believers in unregulated markets (at least on this issue) against true believers in business. Yet the context inescapably includes other exporting economies, particularly in emerging markets. The stakes for the Exim Bank’s defenders have only been raised by the aggressive use of similar export credit agencies (ECAs) by emerging economies and most particularly China. It remains remarkable that the same US Congress that regularly inveighs against unfair Chinese export competition is also contemplating abolishing the agency that may help redress the balance.
Emerging markets are redrawing the map of global trade in high-tech goods with several countries in developing Asia vaulting up the global rankings both in terms of exports of high-tech products and in R&D spending, a new HSBC research report finds.
Much of developing Asia’s ascendance is driven by China’s near six-fold increase in its total share of world exports of high-tech goods to 36.5 per cent in 2013 from a mere 6.5 per cent in 2000 (see chart), HSBC found. The US, by contrast, saw its share of total high-tech exports fall to 9.6 per cent from 29.2 per cent in the same period. Read more
China’s exports hit a positive note just ahead of the big party meeting, aka the plenum. As the FT reported, the 5.6 per cent year-on-year increase in exports in October was higher than market expectations of a 3.2 per cent rise.
But the numbers are actually better than the top line. Here’s why. Read more
Chinese trade balance rose 8 per cent in August from 2012, up to $28.5bn from $17.8bn in July. The improvement was due to higher than expected exports, as demand picked up in Asia and parts of the developed world.
But trade data can be very volatile. Looking at a rolling 12 months, the growth in trade surplus is slowing. And although you would expect China to run a trade surplus with most, if not all, trading partners – China is the world’s biggest exporter, after all – there are some strange statistical puzzles in the data. Chart of the week takes a closer look. Read more
In previous months, analysts have been skeptical of China export data, with worries that the figures have been inflated by the practice of “round tripping” (see previous beyondbrics for more).
So what does the boost in China’s August exports announced over the weekend show? Read more
By Sammy Suzuki of AllianceBernstein
China has been an incredible engine of manufactured exports over the past decade and the central player of the Brics era. But mounting competition from other countries is gradually pulling production away from China. How should investors proceed? Read more
China’s trade had a decent run in July. Exports rose 5.1 per cent year on year, rebounding from a 3.1 per cent drop in June. Imports increased 10.9 per cent year on year, up from a 0.7 per cent fall in June. You can read the full story by the FT’s Simon Rabinovitch here.
Good news for Chinese business, then. But as one reader commented: “Who could China have possibly increased exports to?” Well, let’s see. Read more
Now everyone can see the true colour of China’s exports. The decline of both exports and imports in June surprised the market, but to some observers, the news perhaps is perhaps less shocking: it’s been a bad year for quite a while after all.
The 3.1 per cent fell in exports in June from a year earlier, the worst data since October 2009, has worsened the export growth collapse that started in May. After the regulatory changes towards hot money inflows through fake trading and over-invoicing, exports growth in May slumped to 1 per cent from 14.7 per cent in April. Read more
Amid the alarming headlines over China’s pretty terrible trade data (“Markets Going Down After Horrendous Chinese Data” said Business Insider; and to show the FT isn’t immune, FastFT said “China trade data screams s-l-o-w-d-o-w-n”) it’s worth looking at where exports are going – or not going, in this case.
The overall figures are bad, for sure. Exports dropped 3.1 per cent from a year earlier, with forecasts way off at +3.7 per cent. Pretty much everyone is worried. So who’s (not) buying? Read more
At first glance, China’s trade figures for January are stellar: exports up 25 per cent year on year, imports up 28.8 per cent.
But as ever at this time of year, the great migration of the Chinese New Year holiday makes reading the data a nightmare. Read more
We’ve been here before, of course – do you trust China’s economic statistics? There are two schools of thought: a) you must be mad and b) it’s all we’ve got so let’s make the best of it.
The latest set of numbers to come under fire are the export figures for December. They came in at a robust and healthy 14.1 per cent. Beyondbrics wrote at the time that some analysts seemed less than cheerful. That was an understatement – UBS and Goldman have come out and said that the figures simply don’t add up. So let’s look at the charge sheet. Read more
China’s exports rebounded to 14.1 per cent year on year in December – far higher than expected by economists. Imports were up 6 per cent too, after five slow months. Stocks have ticked upwards in response. Hurrah!
So why do some analysts sound less than cheerful? Read more
As budget negotiations in Congress drag on towards the end of year deadline, questions are being asked about the global ripple of the US falling off the so-called fiscal cliff.
Should Asia investors be losing sleep over it? Read more
China’s trade figures released on Monday aren’t much to cheer about. In contrast to improved retail sales and investment data released over the weekend, Monday’s figures showed exports increased just 2.9 per cent year on year, with imports flat. Markets were uncertain what to make of it all.
See the chart after the break. Read more