China Contracts!

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It looks as if China’s days of double-digit economic growth are well and truly over (at least, for the moment). Data that will be released next week (second quarter figures) will show a quarter-on-quarter slowdown that is setting in now for China’s gross domestic product. The figures will be issued on Monday, but already it seems as if there will be a rise of just 1.8% for the quarter-on-quarter figures, meaning a 7.5% rise over the past year. There are some analysts that believe however that the figures (as low as they are) are overestimated and we might be seeing an even greater slowdown in GDP growth during this second quarter. So, hold on to your hats.

China: Exports

China: Exports

Figures released yesterday showed that Chinese exports had already fallen by 3.1% in comparison with the same period last year. That was the first fall in data for exports since January 2012. Some had predicted a rise in figures of 4% and so they were way of track. Imports fell by 0.7% in June in comparison with the same time last year. There were estimates of a rise of 8%, which was far from correct. The June import fall was even worse than that for May 2013 (-0.3%). In monetary terms that meant that China’s exports to Southeast Asia dropped by $19.6 billion for June. Exports to the US fell to$29.3 billion (from $31.3 billion in May 2013). The new export-orders sub-index dropped to 45.8 and anything that is under the 50 mark shows a contraction.

The 15th July growth-data release will, according to analysts, show a drop to 7% or7.5% in GDP growth for the second half of the year. The figures and the news will deal another blow to the Chinese economy which is already seeing troubled times due to the government in China clamping down on shadow-banking and trying to implement stricter regulations and controls. It would seem that there are other factors also that are leading to the slowdown in economic growth in China. They are having to contend with the slow tentative advances in the US economy and also the increasing trouble that is besetting recovery in the EU. Lastly, Abenomics in Japan is showing some promising improvements. That all means that China is going through the mill right now. Japan saw an increase in Q1 GDP growth to 4.1% (which was over what the Japanese government has suggested with their prediction of 3.5%). Industrial production increased in May by 2% in comparison with April’s figure and that was the 4th rise in a row. Retail sales in Japan increased by 0.8% for May also in comparison with May 2012. Despite the fact that it is not all good, the positive side for Japan is having an adverse reaction in China.




But there may be a silver-lining in the cloud for one country in the world if China’s economy does contract. India! India has relatively limited trade with China. Indian exports (2012-2013) stood at $13, 503 million, while its greatest trade partners are the United Arab Emirates ($36, 265.15 million) and the USA($36, 152.30 million). India imports far more from China than it actually exports there. The value of imports stands at $54, 324.04 million) meaning that if the Chinese economy does slowdown, it will affect the Indian economy relatively little. But, what will happen is that it will benefit from lower commodity prices that will come about with the slowdown in economic activity in China and a stronger position in negotiations with the PRC.


Copper prices

Copper prices

China has been at the heart of the increase in demand for commodities in the world, meaning that prices have tended to become inflated. If there is a reduction in that demand, prices will fall. Commodities are a cause for concern to India since they account for much of their account deficit. India imports 80% of its needs in crude oil presently, meaning that it will be a boost to their economy. China’s demand for commodities in the world has stood at 53% to as high as 111%. That means that while India will be making gains with the fall in prices around the world, those that will see the greatest losses will be suppliers of iron ore, steel or copper.

China consumes roughly 40% of copper in the world alone. The recent statement by Ben Bernanke at the Bureau of Economic Research in Cambridge yesterday that he would not withdraw Quantitative Easing in the foreseeable future had a positive effect on the price of copper. Today copper (to be delivered in September) rose 3.1% (to $3. 1875 / pound) this morning in New York. Copper that will be delivered in November rose 2.9% (to $7, 024 / ton) in London. But the rise today will need to be sustained. Copper is already suffering from an 11% fall this year on the London Metal Exchange. With the figures to be released on Monday from China, it doesn’t look as if much else could happen except consolidate that fall, despite the attempts by the Federal Reserve to calm the markets.

Some are suggesting out there that growth might be far worse than what is being predicted, however. Some are saying that it will be worse than what was experienced by China after the financial crash in 2008.

Shanghai Composite 11th July 2013

Shanghai Composite 11th July 2013

Whatever the outcome on Monday regarding the results, the Shanghai Composite didn’t seem to give two hoots as to what was going to be announced. It rallied 3.23% (up 64.87 points to 2, 072.99).

We shall see if the same holds true on Monday when the figures are published and if they are worse than expected.

Orginally Posted: China Contracts

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Ban KKiller's picture

War profits the bankers. For that reason...AND many, many war. I mean OVERT war of course. 

YuropeanImbecille's picture

Why would the indian bit be any of any comfort? We need to nuke Chindia today if we want to continue on with our lives as they are.

Element's picture

One HEMP pulse and the US economy, Govt and population are toast.

It's that simple to completely demolish a global superpower ... or any other power


... feeling lucky? ... ... Punk?

Winston Smith 2009's picture

Yep, that's the biggest fear and what's really behind the US position on N Korea.  A backward country with nukes wouldn't have much to lose by launching a HEMP attack against an advanced nation with much greater susceptibility and much more to lose to a HEMP attack.  The only way to launch a balanced retaliatory attack would be to respond with a HEMP attack, but as I said, the backward nation wouldn't have much to lose.  Thus, the moral choice to transition to a population killing strike would face the advanced nation which was attacked.  But the deterrent against that would be any additional nukes held by the backward nation. There's no credible response for the more advanced nation and, thus, no credible deterrent against the backward nation threatening such an attack.

Luckily, it takes thermonuclear devices to carry out a HEMP attack and those are much more difficult to make than fission devices which, by the way, the N Koreans haven't even managed to successfully create yet because all of their tests thus far were way below the yield of a properly operating plutonium-based fission device.

Element's picture



"There's no credible response for the more advanced nation and, thus, no credible deterrent against the backward nation threatening such an attack."

Yeah, ironic isn't it, the purported defence capability, the missile-shield paradigm (neo-Maginot Line) would be one of the first things severely degraded and impaired, or outright DECOMMed by any series of concerted EMP strikes.

"Luckily, it takes thermonuclear devices to carry out a HEMP attack and those are much more difficult to make than fission devices"

No, it's not that simple, research HEMP 'saturation' effects. Tests showed that once the ionosphere has been saturated by the prompt E1 inducing radiation flux, even small yields lead to disproportionate scale HEMP effects.

The US and Russia know fission devices are very dangerous E1 EMP weapons. A 500 kt range weapon is simply better for a super strong and persistent E3 induction effect to follow a saturated E1, plus they can affect a much larger area, but make no mistake, any fission EMP weapon will put the US down hard over about half the US continent. But of course there would not be just one used, think 10 to 20, firstly to clear the way to target, then to suppress point-defenses, then to do the actual job, over the whole continent. If it comes, it will not be a half-hearted effort. Which means the chances of succeeding actually increase sharply with smaller weapons. Lighter weapons are much easier and less challenging payloads to fling for very long distances, and to accelerate fast and reduce reaction times.

Thus the things you conclude are weaknesses are far from it, they are the very things that will spank you to a thirteenth century lifestyle.

" ... N Koreans haven't even managed to successfully create yet because all of their tests thus far were way below the yield of a properly operating plutonium-based fission device. ..."

Not so, every test they have made yields larger. The Russian yield estimates are much higher than US estimates (which I suspect is deliberate downplaying). And with the last test the Russian yield reports basically said the Norks have perfected efficient fission weapon design, and achieved a yield in the Nagasaki range.

Also it's a significant mistake to presume their weapons will be Pu-based. For certain they have been developing HEU warheads in parallel and no, an operational HEU design will not be the inefficient heavy gun-type designs of WWII vintage, as you can make efficient compact 300kg HEU implosion warheads that will fit into a cube 13 inches on a side. For some reason people don't realize there's nothing to stop a country making a HEU implosion munition (and rather easily these days too).

For some strange reason people still can't get their heads around that simple fact. The seem to think it only applies to Pu. In WWII is made sense to eliminate the risk of the implosion approach, it had nothing to do with HEU though, it was just the technology of implosion was essential for Pu due to the need for rapid insertion time to achieve efficiency, but this was never true for HEU. So why risk using implosion on the HEU, when a slow core insertion speed from a gun design was enough to get an efficient yield?

But somehow people (and I think this was absolutely intentional) came to the mistaken belief that implosion was only for Pu - WRONG! It works the same for HEU, all you need is a solid-state neutron injector to start the chain reaction at the right time, which is a piece of cake to master these days.

And a HEU implosive design won't have the high-radiation, the toxicity, premature electronics aging, high-maintenance, and serious self-heating and metallurgical issues of a Pu implosion design. Plus they aren't much bigger or heavier than a Pu warhead! That is undoubtedly an extremely attractive set of characteristics for a small arsenal.

oh, and you don't need any reactors, or fuel-cycles, or dangerous reprocessing mess to make them.

So ... would you go for the high-risk vulnerable and detectable Pu arsenal? ... or a much safer, easier to produce, much lower-maintenance and more easily hidden HEU arsenal? ... or in this case, ... both?

Because a real attacker is going to do what you didn't expect, and what you will not see coming. You always know who has Pu bombs, but you won't know who has HEU bombs - South Africa proved that.

akak's picture

When did we start waging war with weed?

What is this "HEMP" to which you guys are referrring --- do you mean 'electromagnetic pulse' (EMP)?

Element's picture

yup, high as a kite, as in High-altitude EMP = HEMP

200kt nuke EMP at ~100k ft results in not much, but same warhead above about 200 km = biblical scale snafu

DeadFred's picture

Many of us who live downwind of Chindia are agin that idea.