Friday, 28 May 2010 05:55

The Narrowing Chinese Trade Surplus

A particularly leveraged approach to playing bearishness in Chinese "uber-growth" is Australia's export, housing and banking sector. We have explained this linkage in In Australia, Tax as a Contagion and Australia: The Land Down Under(water in mortgage debt (paying subscribers should download the full document: Australia Macro Outlook (611.47 kB 2010-05-27 04:43:48). The following is a summary from sources around the web that lend credence to the thesis that import machine for China is slowing down. There is a version in Mandarin at the end of the post, as well as links to much of our recent Chinese research and opinion.

The Narrowing Chinese Trade Surplus

Though China eliminated the trade deficit recorded in March by recording a trade surplus in April 2010, the surplus has been narrower, weakening the pressure for appreciation. The rising price pressures caused by commodities demand could be countered by an increase in domestic currency purchasing power.

Chinese private consumption could not have created an annual trade deficit since it is not strong enough to reverse the trade surplus. The imports are still dominated by commodities and components for re-export, not by consumer goods for domestic demands.

The narrowing trade surplus has been caused by an increase in import prices, greater machinery and components imports, and slower growth in exports compared to recent years.

The slight decrease in commodity demand has not been enough to offset the increase in commodity prices, which may lead to more inflationary pressures.

Chinese export growth will be limited in the coming months due to sovereign debt worries and weaker consumption growth in U.S. and Europe.

The rise of the RMB against the USD will be gradual and expected to start happening during the second half of 2010.

The size of the China trade deficit in March was larger than the consensus prediction due to the higher cost of commodity imports and seasonality factors.

Some analysts believe that the 2010 China trade surplus should be larger than the 2009 one because in real terms China’s exports are growing faster than its imports and the global economy is recovering. I, personally, wouldn’t hold my breath on that one.

China beat Germany to become the world’s largest exporter in 2009.

The low-value-added processing trade has been discouraged by the Chinese government in 2008 but encouraged again after the financial crisis emerged.

y/y figures portray an accurate pictureduring normal times, but during fast-changing times they  may blur trends.

虽然中国在2010年四月消除了三月的贸易逆差,顺差缩小,减少人民币升值的压力。农矿产品需求引起的涨价压力可以被国内货币购买力的提升平衡。

中国私有消费水平不可能制造年度贸易逆差因为它达不到消除贸易顺差的水平。进口大部分还是有农矿产品和再出口的部件构成,不是提供给内需的消费性产品。

收窄的贸易顺差由进口价格的增长、更高的机械和部件进口、跟与今年相比放慢了的出口所产生。

工农产品需求的少量减少不足于抵消工农产品价格的提升,这个现象会引起更大的通胀压力。

中国出口增长在未来几个月会收限制于主权债务危机以及欧美减弱的消费水平增长。

人民币相对美元的汇率会逐渐增长,其间在2010年下半年。

中国三月份的贸易逆差大于共同预测,原因是更高的工农产品进口和季节影响。

有些分析师认为2010年中国贸易顺差会比2009年更大是因为宜实质计算中国的出口比进口增长得更快以及全球经济在恢复。

在2009年中国超越德国成为世界最大的出口国。

抵附加价值的加工业在2008年被中国政府阻碍,但金融风波以后重新鼓励。

与去年同期的数据在正常时期描绘一个精确的画面,但在风云变幻的非常时期这些数据可能会把趋势模糊化。

BoomBustBlog China-related links

Subscribers should reference the following related topics/documents:

Additional and relevant commentary on the bubble in China:

  1. It Doesn’t Take a Genius to Figure Out How This Will End
  2. Can China Control the “Side-Effects” of its Stimulus-Led Growth? Let’s Look at the Facts
  3. HSBC is Performing as Expected
  4. Part 2 of the Mechel Overview is Available
  5. Some Light Shown on My Developing China Thesis
  6. Follow Up to the China Short Thesis Debate
  7. China’s Most Expensive Export: Price Inflation
  8. Believe Those China Growth Stories at Your Own Risk – Just Ask Google!
  9. He Who Bloweth the Bubble With Wet Lips Should Stand Back Lest Spittle and Saliva Spray Upon Ye Face
  10. Goldman Seems to Trust the Chinese Economic Reporting a Tad Bit More Than I Do!
  11. All of my warnings about China are starting to look rather prescient
  12. Now that the world is forced to agree with Reggie on China’s growth propsects…
Last modified on Friday, 28 May 2010 05:55

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