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After 70 Months Of Trade Surpluses, China Records A $7.2 Billion Trade Deficit In March: Detailed Summary Of March Trade Data
In March China recorded its first trade deficit after 70 straight months of trade surpluses, which has occurred even despite global calls that the Renminbi needs to be revalued by about 20%. The primary reason for this was that in March China imported a total of $119.4 billion worth of goods - the single greatest amount recorded in history. This was offset by $112.1 billion of exports, well below the record exports China was pumping out in late 2008 in the mid $130 billion range, and the $130.7 billion exported in December of 2009. Below we present a summary of the key highlights of China trade balance over the past 3 years.
The first chart summarizes the monthly total imports, exports and net trade balance with the entire world.
The second chart presents the net trade balance with China's key trading partners: the EU (long the primary foreign partner of China, and not, as is widely believed, the US), the US, Japan, ASEAN countries, Korea, Australia, Taiwan and the Rest of the World.
As the chart above shows, China's trade deficit with the traditional countries with which it is a net trade importer has surged to $25.8 billion from $16.5 billion the month before. China has hed a positive trade balance primarily with the EU, the US, and the Rest of the World (a group of countries which represent the peripheral trading partners of China, and excludes the EU, US, Japan, ASEAN, Korea, Australia and Taiwan). The amount of positive trade surplus in March declined from $24.3 billion to $18.5 billion. It is also notable that the Chinese trade balance hit an all time record deficit in its trade with Japan, which was $6.5 billion in March, more than double the $3.1 billion in February.
The next chart highlights China's primary trading partner: the EU - the total trade surplus of $4.8 billion declined to the lowest since the record low seen in February of 2009 of $3.8 billion. A big reason for the decline was the surge in EU imports to a record high of $14.5 billion.
When looking at the China-US trade data, it is interesting to observe that imports from the US hit a record number of $9.5 billion in March, even with all the rhetoric pushing for an increase in the CNY. Yet, this of course was offset by an increase in US imports from China, which jumped to $19.3 billion. So while the CNY did not appear to materially impact US-based imports, the US, in its restocking efforts to pump up GDP, has more than offset any benefit from Chinese demand for US goods.
Where the most notable change can be seen is the record surge in imports from the Rest of the World, which at $1.7 billion is likely to become a deficit number when the April trade balance is reported. To be sure, this is predicated by China's ongoing surge in inventory rebuild from peripheral countries, which for the most part tend to be commodity exporters. Look for this series to be most sensitive to a plateauing of China's inventory restocking efforts. Indeed, from July to December, when Chinese banks were cautioned about excess liquidity, this number increased from about $5 billion to $14 billion as China emphasized exporting. In 2010, with excess liquidity once again a core topic, this has materialized in a surge in imports, not only from the ROW but from most countries, and thus the trade deficit.
Some observations: while one month is not indicative of much, should the trade deficit persist in April, coupled with the ever increasing bad loans held by Chinese banks as described by Michael Pettis recently, one can see that a CNY reval at this point could easily be the single biggest mistake China could make - whether it is based on foreign pressure, or due to its own evaluation of the economy. Should Chinese GDP growth "patterns" not change much, and as most experts are aware, continue to be predicated primarily from a record build up in inventories and accumulation in homebuilding products, as well as commodities, we anticipate that the March deficit number is just the first of many. On the other hand, the EU should look at the Chinese-EU trade data and be extatic. If a one month Greek debacle has the potential to spike European imports by China to the degree reported, Europe will certainly think long and hard about how else to keep the euro as low as possible, and thus European goods as cheap to China as possible. The GDP benefit to Europe from an improving Chinese trade deficit and a possible trade surplus (from the European perspective) certainly more than outweighs the associated deterioration that could come from a Greek failure and the EUR hit that would result (on the other hand the Euro will likely drop if Greece is bailed out as well, so this could very much be irrelevant, and be determined simply by just how many trillion China is willing to print to stock even more unnecessary products and commodities).
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China...the great communist experiment built on the phantom ponzi system of a captive western consumer.. only now set to resume their rightful place in the grave yard of failed communist states. China is more dangerous now than ever before modernization, ... a military industrial giant.These trade numbers are just the beginning of set backs for the CCP.
The greatest irony of the modern world is that America calls itself capitalist while China calls itself communist, and both conditions are used to "prove" that communism/socialism is "necessary" while capitalism is evil and doomed to failure.
This world is rotting because of such lies.
True, but China is , regardless of it's new mass industry.... communist. America however far it as a nation has regressed , still has a constitution and Bill of Rights. The revolution of communism that has attacked the upper-middle class is rooted in anti christian doctrine. It's age old East vs West. Im not christian myself, just that there is another equal movement as powerful as usury in over throwing the old social order. Oh , and it is an irony , but America has been compromised for decades.
I see...
China has a mainly private economy, thousands and thousands of private companies, it has a stock market (Shangai), its economy is open for all foreign multinational corporations, but it's not a capitalist economy. It has to be a communist country, for ideological reasons (of both sides).
Hmmmm... very logical...
Like ripples in a bathtub, the cycles reverberate.
What are they doing, importing those Santa Claus on a motorcycle snowglobes that folks put on their front lawns at Christmas?
I'd bet on raw materials. Lots and lots of them. I'd exchange my paper (particularly treasuries and $) holdings for "stuff" as fast as possible if I was them. I am no expert but this does not look like a surprise. Take dollars, roll up big straw, drill big hole to elsewhere, sip deeply.
I drink your milkshake while you are busy, distracted, dealing with your collapse.
That was f-ing great.
China's international shopping spree is simply a macro level version of what individuals do in a hyperinflationary scenario. They know their savings are are shortly going to be worthless, so they spend it like crazy on whatever shit they can get their hands on.
In China's case the money is being spent on base metals and other commodities, western car manufacturers, million acre plots of african farmland, physical gold and silver (but shhhh!) - just about anything to get rid of their mountain of paper before the American ponzidollar collapses into a great abyss.
For all those economists who dismiss the chance of hyperinflation, it has started - in the guise of a wild race to secure global commodities, and China is in lead, pushing the prices up as we speak.
[raw materials. Lots and lots of them.]
I don't think anyone is questioning that this is what they are doing. And pumping Chinese-held dollars back into the global economy is a back-door way for Ben to eventually get his hyperinflation. Lots of dollar inflation will prompt US consumers to go back into debt (which they expect to be inflated away) and resume their buying habits.
First we had the US government becoming a car company, and that was scary enough (ask Toyota about it.) The Chinese and the FED are now bound at the hip. How scary is that?
LOL: if you've been following their trade habits, "rich" China went about the world buying the contracts for "every" commodity from "every" grower, for the next N years. As such they have a long timeline now in which they plan to grow their "consumer-middle-class" and frankly they have been planning so for a loooong time. :)
Can you blame them? Given the choice between Treasury paper you know they are going to inflate away or real assets, what would you do? Also, the idiot western bankers were trying to screw over the commodity producers in order to cover their mortgage loan losses and saying credit was hard to come by, so the Chinese give them the money to repay the loans and in return receive assets for the next several years. US banks now out of the picture and US consumers will feel the inflationary effects from both ends.
The Chinese authorities understand the economic battle of the future is all about resources, rather than how high the central bank can push the equity markets....
China the new champ at old Brit/US game of using your currency to "extract value" from the rest of the world.
PS: ZH code wonks: the text should stay *inside* the visible window when typing a post. It leaks out to right-margin on Safari/MacOS. Very cumbersome.
Safari is a shitty non-compliant browser. Pick anything else....
Works fine for me, and I use it on three different macs.
shrink the window. You know the trick. Place two fingers on the trackpad and squeeze together.
something is not right. If China, US, & EU are net importers, then who are the big exporters now?
All of the oil and natural resource producing countries....
He has a point. Not all energy/resource exporters are running surplus:
- Australia runs a deficit
- Canada runs a deficit
I think the world's math is fucked up. Something stinks about these numbers.
lol i was just about to say that....
some countries in the middle east i would assume have surpluses but yes i think the math is wrong.
I suppose the Chinese are trying to beat the USA at their own game: cooking the books!
Maybe there are no "big" exporters. The resource chase takes one down a lot of narrow alleys into smaller markets. But yeah, oil exporters do well regardless.
yep things getting serious in china , 8 billion trade deficit .. only 1.2 trillion to go. / to balance the scales
looks like the debtor pan is calling the creditor pot black
8 billion now and then is a cheap investment if you can FUD the Congress into rethinking all that "currency manipulator" nonsense.
They're faking the numbers. So are we. C'est la vie.
their not faking the fact they are the bank .. and hold 1.2 trillion of our debt ,
and of course you have no idea about china . sitting in your sun room .. sipping a cold one lol
Looks like most of the deficit is changes in EU, ASEAN, and ROW. What should we make of that? Last time they had such a steep drop in those areas was March 09, after which there were extreme stimuli and easings. Not much stomach for that any more, or even much flexibility for more...
I'm not sure whether this trade deficit as reported is certified Grade A bullshit, or simply garden-variety bullshit, but it's bullshit. It's not a coincidence that just a few short weeks before being labeled a currency manipulator 'evidence' would emerge that the Renminbi is not only not artificially weak, but rather is so strong it's causing a trade deficit for the first time ever. China has sent our hacks in Congress and the Administration as well as the hacks in Europe a clear message: 'We will allow the renminbi to appreciate exactly at the time it is best for us to do so, and if you try to make us do it, there will be no surplus available to buy your debt due to this suprising ongoing trade deficit we can't seem to get out of.'
This is something straight out of Kissinger's book Diplomacy. The message is never contained in the words that get said. The message is in what is unsaid. The Chinese have always been experts at this. They raised Sun Tzu, for Pete's sake.
Kind of my view as well. CCP = liars of the highest order, right up there with our best on Wall Street and D.C., and you can't believe any of the reported numbers. But a US/China trade deficit does send the simple message: USTs? Why? No thanks. I am convinced that is why Geithner made his surprise trip the other day. He had to go grovel, tough, moronic guy style, but grovel he did.
Many economists think that there is a demand price effect taking place in raw materials, Not so, there is insufficient worldwide deamnd and production to casue the price rise. What you are really seeing is the flight from paper currency worldwide with the paper being repalced with every raw material you can imagine. dont be fooled by the faux iron ore demand for end products, just look at the shipyards in China and you will find it stockpiled.
Thats nice. This is news to those who read The New york Times and go to the NY Metropolitan Opera to see Marriage of Figaro. To everyone else, Dow to 40,000.. Google to 19,000 a share
Happens every year, Lunar New Year Holidays. Gasp, we are still their bitch insofar as they could ruin the Dollar whenever they want.
I know which continent I would rather be living in, and it isn't Europe or America
By the way, I think you have used the wrong data in the graphs. The US exports are exactly the same as the EU exports.
As an aside, if you take every countries published export data, it shows that the global economy is a net exporter, so it is hard to know whether this is because the data are fudged or because it does not include the black economy (mainly drugs and other things that do not officially enter the economy).