Chinese economic slowdown confirmed as exports and imports fallPosted on 10 July 2013 with no comments from readers
What does it mean when the world’s largest trading nation reports a fall in exports and imports for June?
This is hardly a picture of health for the global economy and if you project this trend forward, as economists must do, it is not good news at all. The greatest economic miracle of a generation is over.
Exports from China fell 3.1 per cent to $174 billion on an annualized basis in June, the first contraction since January 2012 and the biggest since the end of 2009. It was unexpected. Economists had forecast a four per cent rise.
Where’s the US recovery? Exports to China’s biggest market dropped 5.4 per cent, while number two, the European Union was down 8.3 per cent. You might think the US was in a recession like the EU, not a recovery phase.
Chinese officials don’t expect things to get any better. This is a major slowdown that risks tipping over into a hard landing for the Chinese economy. Indeed it look like it is already there.
That has huge implications for the global economy from commodity prices to BMW sales. The data has been turning negative for sometime. Remember the warnings from the ArabianMoney visit in April (click here).
HSBC’s final purchasing managers’ index last month came in at 48.2, down from 49.2 in May and the lowest since September. It tracks manufacturing activity in China’s factories and workshops and a reading below 50 indicates contraction.
Recession in China?
Both the IMF and HSBC have revised their GDP forecasts downwards recently. But nobody has the self-confidence to tell the story as it really is and try to put a true figure on Chinese GDP which could actually be contracting.
What else do falling annualized exports and imports imply? Why assume that domestic demand must be increasing to compensate? It is more likely declining in these circumstances. Is it not?
The Chinese emperor has no clothes but who will tell him? Where is the little boy in the crowd?