How A Hard Landing For China Became A Helicopter Eject Seat For Brazil

Tyler Durden's picture

Depending on what market or macro indication you choose to believe in, China is doing terribly badly or is on a sustainable path to a more domestic consumption-based economy. This weekend's PMIs show the economy is barely limping higher but Industrial Output is dismally low; HSI is ripping higher while SHCOMP is at multi-year lows. What is more critical, as Bloomberg's Michael McDonough points out today, is China’s growing role as a transmission mechanism between the economies of the developing and developed world. China’s economic rise has been accompanied by a surge in its appetite for imports - especially raw materials - even as global demand has been slow to recover. This introduces new stresses for many export-oriented countries by reducing the diversity of their trade relationships as they become more and more dependent on China in particular, creating substantial risk for those economies, which account for an increasing share of global GDP. Russian, Brazilian and Indian trade volumes have become heavily dependent on China at 10.6 percent, 17.5 percent and 9 percent, respectively. An economic crisis in Brazil would have a minimal impact on the Chinese economy, while a slowdown in China would likely crush Brazil’s external sector and domestic economy.



Source: Bloomberg Briefs

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Jason T's picture

China's car consumption, at some 18 million cars a year now.. from 9 million in 2008 shows that their growth is for real.  New cars in China are new gas tanks.. which require new gas stations, new auto repair shops. auto supply shops, ect.

New cars in the US are replacement cars and I believe we are junking more cars than selling on a net basis.  


So China's consumer economy has a ways to go and that is up up up.  US, even with regards to trade with China is becoming more and more meaningless.

CrazyCooter's picture

Only as long as oil supply goes up up up. Otherwise, the price of oil goes up up up.



Marco's picture

Of course if the petro-dollar system crashes a whole lot of oil suddenly becomes available for more productive and/or resource rich countries than the US (basically everyone except some overpopulated shitholes, predominantly Islamic).

LawsofPhysics's picture

bullshit.  commodities only become "available" when they are produced and delivered.  Oil is no different.  There are over 7 billion people competing for a better quality of life and right now oil is a big part of that.  That demand is growing, not shrinking.  Moreover, America is very resource rich.  Guess it's time to ask for gold in exchange for my sorbeans then.  Fine with me, fucking bring it.

youngman's picture

You can Add Colombia to that list too...our coal exports are down....

LFMayor's picture

But nose-candy is at an all time boom!

1fortheroad's picture

Wait till Brazils PMI is posted, of course they fudge figures with the best of them. 


Never mind, aready done. Brazil is soild as a bric!


Monedas's picture

Brazil's female president is a communist genius !  Oxy Moron:  ON/off

earleflorida's picture

'America's carpe`diem mentality over three decades has destroyed what three centuries had accomplished-- thankyou CFR!!!

Ref1:    [5/1/12]

Ref2:  **                                               ** problems with link below      [6/18/12]

Ref3:     Google @ "AP Impact: China Overtaking US as Global Trader"  [12/3/12]  * Hat tip Drudge Report :-))

Ps.  America has been sold down the river by our politicians whom Sen. Joe McCarthy said before he was {?killed? // 1957}ridiculed and stigmatized by the ?Free Press and Hollywood's commies? jammed packed with Communist!!!

Ps2.   Just look at the forienors at the helm in our state department and a Central Bank that gives the US Gov't. its marching orders!   JMO

thankyou tyler

mnr49ir's picture

An obvious question is: How big is the export sector to the Brazilian economy? The answer is 10.5%. So all exports to China are less than 2% of GDP. VALE may get hit with declining iron ore exports, but China isn't going to stop eating and importing soy and other foodstuffs. Slowing growth in China (by itself) isn't going to crater Brazil's economy.