China’s exports are down 14.5 percent year-over-year, imports down 12.4 percent.
Trade Collapse
Consensus Miss
“The numbers confirm that the economy’s mounting growth shortfalls reflect both domestic and external challenges.”
Exports Fall Third Month
China’s exports fell for a third straight month in July amid a slump in global demand, while imports plunged as domestic pressures also undermine the economy’s recovery.
Overseas shipments dropped 14.5% in dollar terms last month from a year earlier — the worst decline since February 2020 — while imports contracted 12.4%, the customs administration said Tuesday. That left a trade surplus of $80.6 billion for the month. Economists polled by Bloomberg had forecast that exports would drop 13.2% while imports would shrink 5.6%.
Shipments to the US plummeted 23.1% in July, according to the customs data. Exports to other markets including Japan, South Korea, Taiwan, Asean, the EU, Brazil and Australia all dropped by double digit percentages, too.
Global Weakness or Something Else?
China disguises some shipments to escape US tariffs by routing the trade through other counties making miniscule improvements.
So, shipments to the US may be down a bit less than stated.
But if that is happening to a huge extent, the trade data will soon show up elsewhere.
I suspect the bulk of this decline is genuine weakness for goods and the service economy will soon crack too, globally.
Flashback Hoot of the Day: When Will China Overtake the US?
In case you missed it, please see Flashback Hoot of the Day: When Will China Overtake the US?
Interesting times ahead I think, all of the years of negative real interest rates are coming home to roost. If this inflation continues to be sticky and interest rates remain elevated there is gonna be one hell of an asset repricing event on the horizon….
I don’t necessarily buy GDP numbers as being a very good way to measure economic output. It’s really kind of a poor measurement number. For example: a company in China makes a product that a company in the US can buy a shipping container of, put it in a warehouse in the US and sell in the US for 3x what the Chinese company sold it for. Whom ends up with the more productive asset? The Chinese company with the factory and and workers with technical expertise to make stuff or the US company with a warehouse, some warehouse workers and a sales staff? Meanwhile the US reports 3x the GDP of China for the same product?
Another example is military procurement. Bulldozers and dump trucks are a far more productive component of GNP than tanks and humvees unless needed for survival. Last I heard China caps their military spending at 2% of GNP. We should do same although how good of a measure is GNP? China probably would get a lot more war material for the equivalent % of GNP.
Agreed that China has a lot of issues but China has been an off and on political and military powerhouse in their part of the world for thousands of years.
The US needs to make a LOT of changes to get more efficient and a big start would be to make the system fairer and more equitable, getting back to the ideals of a meritocracy. The sets of clown shows we’ve had in Washington for the last 25 plus years have not been helping.
“The Chinese company with the factory and and workers with technical expertise to make stuff or the US company with a warehouse, some warehouse workers and a sales staff?”
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Nothing matters unless the sale is made.
You can have the most wonderful product in the world but it is of no value if it sits in your warehouse gathering dust.
Today UPS reported package volume is down 10% YoY.
Remember when the ports were all backed up with cargo containers?
The recycled cardboard index is down also.
First, al these numbers accurate?
Second after global supply delays demand has been met and larders are full, Chinese orders for raw products to turn into consumer junk have dropped
Third, some Chinese (and Indian) purchases of Russian energy products are going back door and not being counted
Four, as mentioned already, alt Asian suppliers are winning orders, death by a thousand competitors
China’s Young People Can’t Find Jobs. Xi Jinping Says to ‘Eat Bitterness.’
With youth unemployment at a record, the Communist Party is trying to reset expectations about social mobility by talking up the virtue of hardship.
By Li Yuan
May 30, 2023
…
https://www.nytimes.com/2023/05/30/business/china-youth-unemployment.html
Why China is not as powerful as the West might think
Xi Jinping’s brand of economic policy is less and less convincing to Western companies. Politicians are waking up, too.
By Stuart Lau and Phelim Kine
August 3, 2023 4:00 am CET
President Xi Jinping wants to project China as a powerful trade partner — or dangerous adversary — to virtually any country hoping to be successful in the 21st century.
“The rise of the East, and the decline of the West” is his motto. As Chinese growth rocketed and Western politicians fretted over how to respond, it became a national catchphrase, too.
But among the Chinese people — and increasingly in the chancelleries and boardrooms of Europe — a different story is beginning to be told: Beijing’s march toward global economic domination may not be invincible after all.
China managed only weak GDP growth after belatedly liberating itself from pandemic restrictions. The property market is in crisis and youth unemployment has risen to hazardous levels, with one estimate putting it at 50 percent. Private entrepreneurs increasingly live in fear of what the state will do to their businesses and consumers have stopped spending the way they did in the pre-COVID good times.
…
https://www.politico.eu/article/china-xi-jinping-economy-gdp-business-growth-power-west-eu-us/
Somehow the morons in the media/government will figure out a way to blame this on “climate change”.
Either that, Trump or Putin. Thats the drumbeat of the TDS crowd.
What are the numbers compared to 2019? That’s all that matters.
Maersk is down.
On the cusp of a strike Ford And GM pre-empted, cut inventory.
On the cusp of recession US de- stock. WMT is on sale.
China continues to become more and more self sufficient.
A bigger and bigger middle class.
Perhaps they are moving away from mercantilism.
Some decoupling from China happening in some industries. This is a net positive for Japan, South Korea, Malaysia, Singapore, Thailand and other ASEAN countries.
This will do more for the environment than all the electric chairs on Earth, oops Freudian slip, I mean electric cars on Earth. Unnecessary consumption of low half-life consumer products is the worst. Ocean going freighters are terrible polluters and requires quite a bit of pollution remediation on other forms of transportation to make up for it.
I thought they switched to much cleaner fuels. One of the proposed reasons the oceans are a lot warmer this year.
If Ocean going vessels were a county; collectively they would produce 3% of the worlds pollution, but more than 3% of the worlds dirtiest pollution. Only the United States, China, Russia, India and Japan emit more pollution than the world’s shipping fleet. Pollution emissions from ocean-going vessels are currently unregulated.
Import and export declines relating to Mercantilism Economies is a plus for the Environment.
https://www.nasa.gov/feature/esnt/2022/nasa-study-finds-evidence-that-fuel-regulation-reduced-air-pollution-from-shipping
This is good news, Sulfur Dioxide is nasty stuff. Shipping is still a major polluter. Decreased transport is always good for the Environment.
The inflationary depression is digging in for a nice long haul.
US Imports were only down 1% for the month, and 8% year over year. For the most part we are getting our stuff from somewhere else or domestically. China poses quite a bit of risk and companies are reducing exposure.
Hard times would be tough to swallow, people aren’t really used to that. People are used to shopping, having fun, traveling, etc. There’s usually always a way to get what someone wants. I’m not sure if especially the under 30 crowd can handle tough times.
Time to realize the world economy is hitting the brakes. Coupled with a fall in US credit card balances it becomes obvious that folks are preparing for tougher times.
Credit card balances hit an all time high – 1 Trillion Dollars. https://www.foxbusiness.com/economy/credit-card-debt-hits-1-trillion-first-time-ever
USA and european countries are buying billions of dollars in arms. Most of them are homemade.
Good for unemployment numbers in these countries, bad for China.
With parts made in China.
Possibly people are beginning to realize that they just have too much stuff. I am the president of that club.
I think with the advent of streaming services, people might not see as much advertising, blunting those consumptive urges.
I know the Chinese are selling solar panels via other Asian countries, but this is nothing new.
Hopefully so.
Nothing another 2 trillion dollar stimulus wouldn’t “solve”.