I am surprised this is just now taking place, my impression was that the Chinese economy is heavily based on exports while the US economy is mostly weighted towards the domestic market.
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China trade now bigger than US
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Hong Kong Slows in Q-2 2014
My latest.
DOR
GDPssst
The air went out of the Hong Kong economy in the second quarter of the year as real GDP slowed from 2.6% in January-March to 1.8% in the second three months of the year. The first graph shows the decline, and the rise in prices as measured by the broad, national accounts deflator.
Slower growth was evident in private consumption expenditure and international trade while capital investment fell sharply, by 5.6%. On the household side, durable goods purchases fell 5.1% after expanding 4% in Q-1; non-durables were down 10.6%, the deepest slump in over a decade. Tourist spending also fell, by 11.5% after six straight quarters of double-digit growth.
The private sector also dragged down capital investment: public spending rose 0.2% from a year earlier, but a 10.3% drop in machinery, equipment and intellectual property investments pulled the entire segment into negative territory for the first time in more than a year. Including investment in building and construction, private capital investment fell 7% from Q-2 2014. The second graph has the evidence.
The domineering trade sector didn’t help matters. Goods and services exports rose 1.4%, modestly more than the 1% recorded in Q-1; broad imports expanded 1.5% after a 1% rise earlier in the year. Faster growth in imports than exports mathematically reduces overall GDP expansion.
On the services side, things didn’t look quite so good. Sales fell 2.3% while purchases rose 5%. Again, math raises its ugly head: if services exports had remained at the level of a year ago, the overall economy would have expanded a full 3% in 2014’s April-June quarter.
Travel services is the key culprit, with sales of our services to foreign residents falling 11.5% while our own purchase of other economies travel services rose 11.2%, both in real terms. To put it in perspective (and in real 2012 dollars), the $9 billion expansion in the second quarter was despite a $8.7 billion drop in travel services exports. As the third chart graphically illustrates, annoying tourists isn’t such a great idea.
Even excluding earnings from abroad, the economy is weak. Domestic demand rose just 2.2% in the first half. The broad consensus for the full year is down from the 3.5% real growth to about 3.1% and our own expectations of 3-4% expansion are starting to look overly optimistic.
We don’t live in a vacuum, however. While the US and China are holding their own, Japan’s economy fell slightly (year-on-year) in the second quarter on weak consumer demand. Household spending fell 2.7% from Q-2 2013 while capital investment continued to rise, by 5.3%. Overall GDP fell 0.13%.
The good news is that after 18 straight quarters of deflation – the second longest in post-war history – the GDP deflator rose more than 2% from a year earlier. The longest run of collapsing prices, from 1998 to 2008, lasted 42 quarters. Mr Abe seems to be achieving at least one of his key objectives.Trust me?
I'm an economist!
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Moving the Goal Posts
A quick note about the on-going Rmb adjustments.
The People’s Bank of China’s (PBoC) decision to depress the renminbi on August 11 signals the end of the previous consensus that restructuring the economy takes priority over the pace of economic growth. The move will do little to improving exporters’ competitiveness, but may take the froth off consumer purchasing power. That is exactly 180 degrees from where monetary policy has pointed for the past three years.
The upside is that the move will draw a thin but important line under the country’s deflation. If reports that the market will bear more responsibility for setting the daily exchange rate are accurate, the move will also, over time, help establish the renminbi as a reserve currency worthy of inclusion in the IMF’s Special Drawing Rights (SDR) basket.
Since 1997-98, most of East Asia’s currencies – excluding the yen – have remained fairly stable against the US dollar. Since August 11th, however, competitive devaluations have been underway. Some were already sliding, such as the Japanese yen and Indonesian rupiah. Now, however, all will have to reassess their position vis-à-vis the renminbi.
At this writing, the exchange rate is about where it was in the Spring of 2011. The collapse in the global price of oil over the past year, however, means that even at Rmb6.5:US$1, China is still paying only 60% of the year-ago price of oil in renminbi terms, and 10% less than in early 2011, when crude was around $105 a barrel.Trust me?
I'm an economist!
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Originally posted by DOR View PostA quick note about the on-going Rmb adjustments.
If reports that the market will bear more responsibility for setting the daily exchange rate are accurate, the move will also, over time, help establish the renminbi as a reserve currency worthy of inclusion in the IMF’s Special Drawing Rights (SDR) basket.
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Zinja,
The IMF hasn't added the renminbi to the SDR, and probably could not until it become fully convertible. More important, adding a currency that is closely aligned with the dollar does nothing to improve the quality or utility of the SDR.Trust me?
I'm an economist!
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China trade update
China’s exports fell 6.6% in the first three quarters, from the same 2015 period and in US dollar terms. Imports were down 8.2%, trimming the trade balance by 1.9% and two-way trade by 7.3%.
On the outbound side, September (-10%) was worse than August (-2.8%) and Q-3 (-6.1%) was worse than Q-2 (-3.9%). Imports fell in September by 1.9%, after rising 1.5% in August. In Q-3 purchases from abroad were down 5%, compared to -6.7% in the second quarter.
In the first nine months, exports totaled US$1,551.9 billion and imports $1,134 billion. The trade balance was +$412 billion.Trust me?
I'm an economist!
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Originally posted by Toby View PostI don't possess one Chinese Item that was designed or engineered and then manufactured in China....The Chinese either copy badly or are being used as cheap labour by western companies. Why do we suffer it???
If you don't want that iPad or smart phone to cost $3,500, use China to keep the global cost down.Trust me?
I'm an economist!
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Originally posted by DOR View PostPrice.
If you don't want that iPad or smart phone to cost $3,500, use China to keep the global cost down.
I always try to avoid Made in China especially in automotive parts. Machine parts like bearings, gears, springs, valves, rods, pistons I source US made. Pay for peace of mind and it is maybe around 10-20% more. Parts that aren't machine but under stress, like engine mounts, I source from the manufacturer which aren't China made. Just spent $180 on a mount vs. $50 aftermarket as aftermarket lasts maybe six months vs. 15 years for OEM. With ten cars my local supplier knows me and my desires.
Other items, like kitchen tools, I buy used on eBay. That way my money goes to Americans in the Midwest rather than China. Nothing worse than a Chinese made Black & Decker iron leaking in five months while the 1970 GE iron still is flawless. Entertainment (music) is all sourced off eBay. Why buy a Chinese made stereo receiver, supposedly rated at 50 watts RMS, when you can get a great Sansui 4000 from 1970 rated at a very conservative 45 watts.
I don't consume much so to speak so I look for value for my money and am willing to pay a bit more for reliability and US made.
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Originally posted by Doktor View PostChina is now the largest trading nation in the world in terms of imports and exports, after overtaking the US last year.
China has leapfrogged the US to become the world’s biggest trading nation, bringing an end to the US’s post-war dominance of global commerce.
The total value of US exports and imports in 2012 was $3.82 trillion (£2.4 trillion), the US Commerce Department has revealed. China’s customs administration has already announced that the country’s total trade last year was worth $3.87 trillion.
“It is remarkable that an economy that is only a fraction of the size of the US economy has a larger trading volume,” Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington, told Bloomberg. “The surpassing of the US is not because of a substantially undervalued currency that has led to an export boom,” Mr Lardy said, pointing out that Chinese imports have grown at a faster rate than exports since 2007.
Not only has China managed to post a larger total trading figure, but the breakdown of imports compared with exports also makes for favourable reading in Beijing. China had a full-year trade surplus of $231.1bn with the US posting a total 2012 trade deficit of $727.9bn.
Indeed, the Asian powerhouse looks set to table an even better performance in 2013, as trade accelerated substantially last month. Exports jumped 25pc on a year-on-year basis and imports were up 29pc in January, beating analysts’ expectations. However, the data is distorted by the timing of the Chinese New Year festivities.
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$1tn disparity in balance in one single year?
this is not an argue. Just an important point to add to the picture which is not completely clear from trade statistics.
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Originally posted by DOR View PostWhen did the US have an industrial base making iPhones? Or, laptops computers?
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