US Export Push Fails As Chinese June Exports And Trade Surplus With America Hits Record
China's first trade deficit in many years of ($7.2) billion recorded in March is now a distant memory. The Chinese General Administration of Customs has released June trade data, which confirms that no matter what China does with the yuan, and no matter the amount of posturing coming out of the US and Europe, in their attempts to 'stimulate' an export economy at least in words, the Chinese export juggernaut marches on: the June trade deficit came in at an even $20 billion, on relatively flat imports, and relentlessly growing exports. In fact, after surging by $32 billion in March, imports have remained flat each month at just under $120 billion, while exports have been increasing consistently as month after month of fiscal stimulus has been pushing the domestic export industry to the redline. Indeed, in the midst of a CNY reval, and a complete collapse in the Baltic Dry as excess supply, especially in capesize vessels is causing shipping rates to rapidly hit unsustainable levels, exports to the US and the Europe hit multi year records - the EU came in at $27.2 billion, the highest since the summer of 2008, while the US saw a record number of Chinese exports in the month at $25.5 billion, as well as the biggest trade deficit with China in history (at least according to China) at ($17.7) billion- something tells us Chuck Schumer will not be too happy with this number. Most importantly, total Chinese June exports of $137.4 were, paging Chuck Schumer again, an all time record.
Total imports and exports:
Total imports and exports by country:
Below is the monthly trade detail with the US - note that June 2010 was the all time biggest amount of exports to the US, as well as the biggest net trade surplus in history. Not a good data point for the Obama Export Commission.
And the EU:
Yet the June export record will likely be a fluke. Bloomberg quotes Shen Jianguang, Hong Kong-based economist at Mizuho Securities Asia Ltd, who warns: "Exports may see a sharp deceleration after July as demand in Europe and the U.S. weakens and a stronger Chinese currency, higher wages and reduced export tax rebates erode the competitiveness of Chinese goods. The government may have to intensify efforts to boost the domestic economy as they have limited control over external demand."
Another question is how will Obama explain the fact that the "terrific" start to his Doubling of exports in 5 years program has begun with a month that shows a record amount of imports from China. And for those who believe that Europe, gripped in the throes of austerity, will continue to import the same amount of near record quantities of products, disappointment is sure to set in as soon as one month from now. Furthermore, the collapse in the BDIY which has dropped by more than half since the beginning of June is an indication that even an institution as honest as the Chinese Customs administration may have a few 'birth-death' adjustments in its numbers. The June number is nothing less than a culmination of all monetary and fiscal efforts to push the export economy to the edge. And as secondary indicators now roll over, we expect a plunge in the July trade numbers.
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