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Chinese Imports Surge To Record $152 Billion In March Despite "Weak" Yuan As $140 Million Trade Surplus Posted

Tyler Durden's picture





 

Despite relentless calls that the Chinese currency is undervalued, and that it really is China's fault that Brent is nearly at $130, in March the world's fastest growing economy posted an import number of $152 billion: an absolutely monthly record. Still, this was almost precisely offset by total exports which at $152.2 billion represent the third highest monthly total ever (following only November and December of 2010), and leading to a trade surplus of $140 million, in essence implying that the CNY is rather correctly priced (at least per the Politburo's calculations of imports and exports). This is substantially stronger than the consensus which was looking for a trade deficit of $3.35 billion in March, arguing that following February trade deficit which came at a multi year high, in part blamed on the Chinese New Year, the country is once again in aggressive inventory restocking mode. A detailed look at China's two main trade partners, the US and EU, shows that exports to the US surged back to $25.1 billion from $15.8 billion in February, while imports from the US were $12.1 billion. Yet despite a strong euro, it is the EU that exported a record amount of goods to China in March: an all time high of $19 billion. Still, this was more than offset by $28.5 billion in imports from China for a trade surplus of $9.5 billion with the European Union. Ironically, it was the Rest of the World (excluding the US, EU, Japan, ASEAN, Korea, Hong Kong, Australia and Taiwan) which benefited the most, after it exported a record amount of goods to China, or $53.9 billion in March. At least someone (who actually has worthwhile goods to export) is seeing their economy grow, regardless of just how undervalued, or fairly priced, the CNY may be.

Total Chinese monthly imports and exports:

Monthly trade with key international partners:

China US:

China EU:

And China - ROW:

Read more at Bloomberg

 


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Sun, 04/10/2011 - 12:35 | Link to Comment spiral_eyes
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importing a lotta bullion, bitchez

Sun, 04/10/2011 - 12:38 | Link to Comment Long-John-Silver
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oil and coal also.

Sun, 04/10/2011 - 14:30 | Link to Comment Drag Racer
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as well as food

Sun, 04/10/2011 - 23:02 | Link to Comment disabledvet
disabledvet's picture

and those cool little pink birdie things that "dip down to the drink" then "dip up from the drink!"  and do so without any apparent oil or electricity whatsoever!  (it must be some dark trick of some sort....)

Sun, 04/10/2011 - 13:25 | Link to Comment Popo
Popo's picture

All part of Bernanke's grand plan to "save" the American economy.  When China's imports quadruple only a few more times, they'll be able to buy things from our fresh, new American sweatshops. 

Sun, 04/10/2011 - 12:34 | Link to Comment Zer0head
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Sun, 04/10/2011 - 12:39 | Link to Comment cosmictrainwreck
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I totally agree, ZerOhead

Sun, 04/10/2011 - 13:30 | Link to Comment Hephasteus
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Most people with blank posts it's the smartest thing they've ever said. But zero isn't one of them.

Sun, 04/10/2011 - 17:11 | Link to Comment Hulk
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Thats the phony ZerOhead...

Sun, 04/10/2011 - 23:01 | Link to Comment disabledvet
disabledvet's picture

maybe he meant "ack."

Sun, 04/10/2011 - 12:40 | Link to Comment jmac2013
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Anyone have advice on how to get some of that "weak" Yuan?  Other than the ETF or going to China, is there another alternative to trade some of my FRN for Yuan?

 

Sun, 04/10/2011 - 12:43 | Link to Comment Long-John-Silver
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That's like trying to find the best place in a standing line of dominoes.

Sun, 04/10/2011 - 12:39 | Link to Comment Long-John-Silver
Long-John-Silver's picture

Battle of the Fiat currency's, and we're losing.

Sun, 04/10/2011 - 12:53 | Link to Comment tmosley
tmosley's picture

No, no, we're "WINNING!"

Because Bernanke and Obama are downing shots of tiger's blood, and have Adonis DNA.

Sun, 04/10/2011 - 12:43 | Link to Comment izza301
izza301's picture

This is nice to know that China has continued importing goods to US in spite of their melamine issues. Glitec UK

Sun, 04/10/2011 - 12:56 | Link to Comment FreedomGuy
FreedomGuy's picture

I submit that while trade numbers especially the surplus-deficit numbers are interesting to look at, they don't matter. They are only a problem for currencies as it can present currency stock and conversion problems. However, it is not necessarily "bad" if you run a deficit nor good if you run surplusses.

If a farmer in India buys a John Deere or International Harvester he theoretically runs a trade deficit. He and India bought something but did not export anything of equal value. However, the farmer in India now improves his farm's efficiency, productivity and profitability even if all his goods go other Indians. Like all business it is a mutually beneficial or win-win situation. He may export his crops to Sri Lanka who now runs a trade deficit with India but gets to eat. Sri Lanka sells us clothes and we now run a trade deficit with Sri Lanka. You see the point.

To make it more personal you probably run trade deficits with your local grocery store, auto service center, convenience store, Home Depot, ect. You buy much more than they buy from you. In fact, they probably buy nothing from you. So, you're are in a trade deficit situation. Your state may import more stuff from the state next to you than vice versa. Now your state has interstate trade deficits. It doesn't matter. What matters is that you, your state and our nation get the things we need and want to function. Trade deficits by themselves do not matter.

It matters to Congress because they may aim to "fix" something that is not broken. Then everyone loses. The Indian farmer doesn't get a harvester, Sri Lanka loses or pays more for food, we don't get nice shirts, etc. Bad economics and models lead to terrible decisions.

However, we DO have currency problems but it is more due to currency shenanigans than trade.

Sun, 04/10/2011 - 13:03 | Link to Comment A Man without Q...
A Man without Qualities's picture

In the words of Groucho Marx, "I think you've got something there, but I'll wait outside until you clean it up."


Sun, 04/10/2011 - 16:54 | Link to Comment FreedomGuy
FreedomGuy's picture

Propose an alternate truth, then. I'm interested.

Sun, 04/10/2011 - 23:03 | Link to Comment disabledvet
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it matters to China.

Sun, 04/10/2011 - 13:30 | Link to Comment Caviar Emptor
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It doesn't really matter if how much "efficiency" and "productivity" you think you'll have in the future when the oil you need to get there and also eat today is threatening to consume your total profit. And when it puts you into a loss then you can shove your future productivity. You let the International harvester to rust as you abandon it. 

Sun, 04/10/2011 - 16:51 | Link to Comment FreedomGuy
FreedomGuy's picture

That can never happen on a long term basis. If oil goes high enough other energy forms fill in. Here in the western U.S. natural gas pipelines are badly oversubscribed. Wind, solar and other things will fill in. Apart from food (in theory, not reality) no one thing can consume all your productivity. On a short term basis it can cause convulsions, but not permanently.

Sun, 04/10/2011 - 23:09 | Link to Comment disabledvet
disabledvet's picture

i agree that "millionaire farmer John" whose "still hangin at the bar stool wondering why he can't get a date" has no problem with "International Harverster man showing up and harvesting."  In fact he was "last seen doing actual farming back in 1998" and ever since "has had a problem finding something other to do other than throw back a few Millers." In face Gladys...the 60 something "Harley beach of '72" (or at least so says the tatoo) as been barking at him of late.....

Sun, 04/10/2011 - 16:19 | Link to Comment Reese Bobby
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You are probably familiar with the Expenditure Approach to GDP:

GDP = Consumption + Investments + Government Spending + (Exports - Imports)

The $1.6 trillion of Government deficit spending is propping up Consumption, (compare Consumption with and without Transfer Payments to see this).  Investments have had a bounce off the lows but are largely offset by the Trade Deficit.

Consumption isn't looking good with weak employment, incomes, home prices at a time when gas/food/etc. prices are flying.

Investments won't really ramp up until there is hope for Consumption.

Our Trade Deficit feels structural given we sent all our manufacturing jobs overseas.

Rather than accept a recession the Banks that control our Country directed our bought-and-paid-for politicians to spend us into oblivion.

Besides ranting about how screwed the U.S. economy is I hope to point out that the Trade Deficit does matter as it is symptomatic of our economy's illness and a drag on GDP.

 

Sun, 04/10/2011 - 16:47 | Link to Comment FreedomGuy
FreedomGuy's picture

"GDP = Consumption + Investments + Government Spending + (Exports - Imports)"

Yes, I am familiar with the GDP formula. I am also familiar with the debate about how to factor the government portion since government is essentially a dead weight loss to an economy. I buy into Austrian economics. An import is not necessarily a loss to GDP. Perhaps in a short term you could argue that and I would categorically agree $100K in dollars went overseas for Chinese goods we added $100k to the property we own in the U.S. The net is neutral but negative to the GDP formula. Also, there is an inherent value over time of any purchase that should actually accrue to the positive. My harvester scenario is an example. By the formula if we automatically stopped all imports our GDP would improve. Yet, would our actual prosperity improve? If government became 100% of our economy replacing all private consumption and investment would that really zero out? If we manipulated the value of our currency we could wipe out a deficit with no changes in product. Would that be truly positive? We can inflate the currency used for the numbers and improve GDP. That is a common comment here on ZH.

I am not arguing that we should not look at trade numbers. I think they are useful to know. I disagree that we are "sending" our manufacturing jobs overseas. I find no trainloads of jobs going to the coast. What I do agree is that we are making America hostile to manufacturing and businesses of all sorts through taxes, regulations, monetary policy and other issues. I also find that simple improvements in productivity causes any sector to shrink, as well. We grow more food with fewer workers than ever. It's the same in manufacturing. I have a friend who's a machinist. I am fascinated by what one person with some sophisticated machines can do. It's impressive to watch. He does not stand at a lathe with a piece of raw steel anymore.

I DO also recognize that other countries try to poach industries by various mechanisms like currency manipulations, regulations and subsidies. We can fight that but it becomes economic war. Economic war is similar to physical war. There are casualties and pain on both sides and you'd better be prepared for it...including the possibility that you lose.

However, I stand by my original post that trade deficits are not inherently bad. I challenge anyone to prove they are...apart from currency accumulation problems which makes a good argument for a gold standard and exchange rates.

Sun, 04/10/2011 - 18:21 | Link to Comment SDRII
SDRII's picture

The problem with comparitive analysis arguments is there is not and never will be harmonization. Look at US trade policy (FX management) which is little more than the levers through which hegemonic ends are sought (just like Sterling). So economic arguments always derail in the theoretical abstractions because that great potential, whether future production or other, often ends up as subsidized current consumption or worse yet perpetually unrealized success. Trade is the tomorrow that never comes. Do you think that is an accident?  

Sun, 04/10/2011 - 20:28 | Link to Comment FreedomGuy
FreedomGuy's picture

Good points but we always have and will live in an imperfect world. Yet, I do not wish to stop trading. I love those cars they design and make in Germany. I actually think good economic theories hold up well in the real world. Free market-Austrian theories seem to predict very well what happens...including when you manipulate the "system".  I do agree we play with various levers of trade like tariffs, subsidies, rules and the likes for specific political purposes and rarely for selfless economic purposes. This is why you shouldn't give government much power. People in government use those levers we gave them to their own benefit...and their friends' as you suggest.

Trade is here today. It's warped, tortured and disfigured but it is still here. It still works when we let it. My point is that we often think it is broken by misinterpreting the numbers...like trade deficits when it may not be broken at all.

Sun, 04/10/2011 - 23:11 | Link to Comment disabledvet
disabledvet's picture

they're not a dead weight if they kill you first.

Sun, 04/10/2011 - 13:05 | Link to Comment DonutBoy
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Oh come on.  They report whatever they think will cause them the least grief.  We should recognize this behavior, we do the same.

Sun, 04/10/2011 - 13:13 | Link to Comment cosmictrainwreck
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you mean to tell me they make shit up?! like BLS? I am flabbergasted

Sun, 04/10/2011 - 16:55 | Link to Comment FreedomGuy
FreedomGuy's picture

If I take your meaning correctly, I agree. I would be suspicious of sudden turnarounds in the data that wipe out unfavorable numbers, particularly trade deficits. I would add inflation data to that, as well.

Sun, 04/10/2011 - 13:23 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Hehe. Sovereign "Margin Compression" from increasing energy and natural resource prices.

A case of indigestion: if you try to go from 0 to 60 in 5 seconds in this world, it's gonna cost ya. No more cheap oil to be had. No more cheap anything. The fridge has been raided. 

Sun, 04/10/2011 - 13:27 | Link to Comment Hephasteus
Hephasteus's picture

Let's see. 20 billion of mythical intel chips that never even HEARD of a chip plant. 20 billion of made up fairy tale iphones, ipads and ILies. Pretty soon you are talking a pretty signficant "accounting" entries.

Sun, 04/10/2011 - 13:37 | Link to Comment russwinter
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The combined US imports from China for Feb and March combined was $40.9 billion vs $47.7 billion. The March figure wasn't much of a bounceback at all, and actually confirms the export slowdown is real. 

 

This AP story on huge rising costs trashing Chinese exporters is the story of the decade. 

http://www.manufacturing.net/News/2011/04/Labor-Relations-Chinese-Workers-Spurn-Jobs/

 

Here is China Exxporters going down, Western Buyers Ambushed

http://www.wallstreetexaminer.com/blogs/winter/?p=3667

Sun, 04/10/2011 - 13:58 | Link to Comment augie
augie's picture

Thank you for the links.

Sun, 04/10/2011 - 14:53 | Link to Comment A Man without Q...
A Man without Qualities's picture

Excellent links.  I've always thought there was a crisis brewing in China, where rising inflation forces wages higher, thereby destroying the labor-intensive business model.  Moving to an automated process raises the question - why China?  I know a Australian textile manufacturer who has gone through this whole process - domestic production could not compete with China, but then as Chinese wages rose, automation became more economic until it reached a point where the small premium he could charge for made in Australia meant there was no reason to offshore.

This is a huge problem for China - a nation that's just gone from an agrarian society, to an industrial one, but has no way to become post-industrial with all those mouths to feed...

Sun, 04/10/2011 - 16:58 | Link to Comment FreedomGuy
FreedomGuy's picture

That is actually the benefit of "free" economies. People feed their own mouths and a billion different transactions and alterations of behavior occur to make sure that happens. Centrally planned governments simply cannot manage it well. They can simply favor one course of action with little thought to the consequences in other areas.

Sun, 04/10/2011 - 21:20 | Link to Comment PulauHantu29
PulauHantu29's picture

Excellent links and articles...thank you.

Sun, 04/10/2011 - 13:36 | Link to Comment Caviar Emptor
Caviar Emptor's picture

There's a game being played in the world today, in China as in the US and most large economies. It's a competition to see if we can all pretend that we're not running short of natural resources. If we all make pretend, then first of all we avoid having to think or make decisions. That's painful in an oblivious world. We instead try to go on making believe we all deserve to be yuppies forever! Our profession is shopping! We have a passion for it! 

So the current unsustainable course we're on in the world today leads directly to a vicious cycle: keep printing money or extending credit so we can afford increasingly un-affordable natural resources which we all need for growth. Heck, we need them just to sustain the status quo. Otherwise, well, we might end up with a Jasmine Revolution. 

Sun, 04/10/2011 - 14:44 | Link to Comment bothsidesnow
bothsidesnow's picture

+1000 Finally someone get's it you don't need fancy charts and government stats to know that as population increases demand increases for natural resources so you have two choices go without because you cannot afford it or fake that you can afford it with credit. The US wins on the fake job because we have the military to back-up the fake.

Sun, 04/10/2011 - 13:58 | Link to Comment TheGreatPonzi
TheGreatPonzi's picture

Question to Americans: what happens when Chinese imports surpass Chinese exports? 

The beginning of the end for the US, because the Chinese gov will have no interest in buying Treasuries. This will be a brilliant move which will allow them to buy everything from the West on the cheap.

When will it happen? In 10 years, probably. So whatever happens next, even a big recovery, the US are dead in 2020. 

Sun, 04/10/2011 - 23:14 | Link to Comment disabledvet
disabledvet's picture

Chuck Schumer will claim victory---but quizically since he "still doesn't understand how New York State could be bankrupt at the same time."  Indeed "China will suddenly have an interest in SELLING US treasuries" since "if that's an actual trade deficit" as is actually being reported "they need to make up for the lost production with increased investment" which...aw, forget it. 

Sun, 04/10/2011 - 14:22 | Link to Comment DavidC
DavidC's picture

I don't normally use terms like this, but Timmy ("If we were China, we would lend the USA money") and Benny ("We see no inflation") must be crapping themselves.

DavidC

Sun, 04/10/2011 - 17:37 | Link to Comment nah
nah's picture

today China love America

Sun, 04/10/2011 - 19:42 | Link to Comment Wolf in the Wilds
Wolf in the Wilds's picture

Actually, the numbers are not as they seem.  A lot of the increases are due to price increases.  It is not accurate to just look at value to determine growth.  To see what is really going on imports and exports, you have to look at value vs volume.

 

http://viewfromthewilds.blogspot.com/2011/03/china-trade-data.html

 

 

Sun, 04/10/2011 - 23:17 | Link to Comment disabledvet
disabledvet's picture

awww, that's nice "wolf in the woods."  that's no price increase--but in fact a VOLUME DISCOUNT!  I'll have to remember that one.

Sun, 04/10/2011 - 20:09 | Link to Comment Gimp
Gimp's picture

The nice thing about a totalitarian society, the numbers always come out in the governments favor....

Sun, 04/10/2011 - 21:22 | Link to Comment PulauHantu29
PulauHantu29's picture

Don't forget those empty Ghost Cities where millions of vacant apartments sit there....collecting dust:

http://www.sbs.com.au/dateline/story/watch/id/601007/n/China-s-Ghost-Cities

Mon, 04/11/2011 - 02:01 | Link to Comment Itsalie
Itsalie's picture

more like importing copper as collateral for bank loans; credit is tight for non state owned companies; inflation is reaching 2008 levels and misallocation of capital is serious - the europe-asia-china "reflexivity loop" is looking fragile and tenuous. Give it six or nine more months and the euro and asian-ex JPY currencies go into stall mode.

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