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China’s export growth may have slowed compared to recent months, but it is nonetheless up 7.1% year on year in August. I don’t know what the global figures are, but I suspect that China continues to grow its share of total exports.https://t.co/iLoxvtap0r via @scmpnews— Michael Pettis (@michaelxpettis) September 7, 2022
- China’s export growth may have slowed compared to recent months, but it is nonetheless up 7.1% year on year in August. I don’t know what the global figures are, but I suspect that China continues to grow its share of total exports.
- This should seem pretty remarkable given the problems the Chinese economy faced, but it isn’t. The government continues to release measure after measure aimed – almost desperately – at keeping total production rising. And production has risen, even if only slowly.
- The real problem, which Beijing still seems unable to address, continues to be very weak domestic demand. Imports were barely up year on year, rising nominally by 0.3% and almost certainly falling in real terms. This is the third month of surging exports and flat imports.
- This shows just how terribly weak domestic demand continues to be. Between rising uncertainty, high unemployment and downward pressure on wages, Chinese households are completely unable to increase their consumption and, with it, their imports.
- The trade surplus for August was $79.4 billion, the sixth highest monthly trade surplus on record. This may no longer seem a big number, but it is 35% higher than the record-breaking August surpluses of 2020 and 2021, and it is 129% higher than in 2019.
- Year to date China’s trade surplus is $571 billion, or 54% higher than it was last year at this time. This is equal to roughly 4.8% of China’s GDP.
Nixon Shock, the Reserve Currency Curse, and a Pending Currency Crisis
It’s important to understand that the US dollar as a global reserve currency and the end of Bretton Woods II is what makes this possible.
The US is the world’s consumer of last resort. Things have become increasingly unbalanced ever since Nixon closed the gold convertibility window.
Now, nations can inflate at will and they do. The result is soaring deficits and massive trade imbalances that were self-correcting under a gold standard.
For discussion, please see Nixon Shock, the Reserve Currency Curse, and a Pending Currency Crisis
This post originated on MishTalk.Com.
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Mish
“China’s export growth may have slowed compared to recent months, but it is nonetheless up 7.1% year on year in August. I don’t know what the global figures are, but I suspect that China continues to grow its share of total exports.”
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yuan weakening vs usd … necessary to compete with other falling Asian currencies. China’s youth (16 yr to 24 yr) unemployment rate @ 20%.
Years ago then President Hu made a comment that still resonates. Something along the line of ‘China needs to create 17 million new jobs a year to accommodate population growth’.
Create jobs or civil unrest. That simple.
“This shows just how terribly weak domestic demand continues to be. Between rising uncertainty, high unemployment and downward pressure on wages, Chinese households are completely unable to increase their consumption and, with it, their imports.”
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Chinese housing tanking … and taking with it household “wealth effect”.
Are you afraid of people with different opinions to your own? Mish doesn’t impose any ideological constraints on people commenting here, nor would he believe in censorship of any kind. So, to answer your question, he’s doing the same thing you are doing here — getting information and making comments. Guess what? Mish has plenty of left wing and center left commenters here. Either deal with it or die mad about it, idc tbh>That all being said, if you think the US govt lies any less than the Chinese government, then you’ve swallowed more propaganda than the average Chinese citizen, because at least the KNOW when the government is lying. Here, everyone seems to labor under the delusion that the government and media tell the truth. They all lie, homie. Economic figures like GDP, payrolls, unemployment, and sentiment PMIs, are almost CERTAINLY goosed to the upside, and economic projections of non-western aligned countries are almost always certainly goosed to the downside by western economists and media. You gotta take them all and sorta parse the needle of truth from the haystack of lies in order to get to the bottom of things. That all being said, the Chinese Communists seem to have a far better understanding of money, economy, and finance than the clueless western economists and officials