[Marxism] China Trade Surplus Falls To 1/8 Prior Month Level

brad bbauerly at gmail.com
Fri Mar 13 14:53:26 MDT 2009

  Sent to you by brad via Google Reader: China Trade Surplus Falls To
1/8 Prior Month Level via naked capitalism by Yves Smith on 3/10/09

No details up yet on my cheapie version of Bloomberg, will update when
more is in.

Recall, however, that many analysts foresaw a fall in China's surplus.
It had stayed at near record levels despite falling volumes of trade
overall because imports fell faster than exports.

Well, many imports are used to produce exports. As forward orders
decline, manufacturers would buy less in the way of inputs, while still
in the process of completing existing orders.

Update 12:10 AM: OK, sports fans, we now have more meat. Note in
particular how the decline was way above consensus forecasts. The fall
in the surplus plus dollar strength (ie little/no need to intervene to
keep the RMB from rising) also says China will have much less reason to
buy dollar assets like Treasuries
China’s trade surplus plunged in February as exports fell by a record,
adding pressure on the government to spur domestic consumption to prop
up the world’s third-biggest economy.

The trade gap narrowed to $4.8 billion, about an eighth of the amount
in the previous month, the customs bureau said in a statement. Exports
tumbled 25.7 percent from a year earlier. Imports fell 24.1 percent.

The government has halted the yuan’s gains against the dollar and plans
to cut export taxes to zero as demand dries up because of the global

“There’s no hope for export demand to recover any time soon,” said Wang
Qian, a Hong Kong-based economist at JPMorgan Chase & Co. “How fast
imports recover depends on how soon the government’s stimulus package
kicks in and creates real demand in major industries.”

The timing of a Lunar New Year holiday masked what would otherwise have
been a steeper decline in trade, said Mark Williams, a London-based
economist at Capital Economics Ltd. The holiday meant that there were
more working days in February this year than in 2008.

The median estimates in a Bloomberg News survey of 16 economists were
for a $28.3 billion trade surplus, a 1 percent decline in exports and a
22.5 percent drop in imports.
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