Surge In Chinese Exports "More Curse Than Blessing" SocGen Says

Tyler Durden's picture

The main news overnight was the Chinese February trade balance, which if the past several years were any indication, would have been a deficit in keeping with the cyclical economic weakness resulting from the Chinese Lunar New Year. Surprisingly, instead of a deficit, as SocGen explains Chinese exports came in massively above expectations in February, while imports were on the weak side. The strength of exports was bewildering, especially when it was, to a large part, a result of strong exports to the G2.

Specifically, China's exports increased 21.8% in February, massively above expectations of a 8.1% rise, and despite the late timing of the Spring Festival. Hence, export growth in January and February was sharply up to +23.6% from +9.4% in Q4 2012, very much at odds with the lack of improvement in Korean and Taiwanese exports during the same period. China's export data depicted a very different picture of the global trade from that indicated by others' figures.

And while exports were soaring, for reasons largely unknown as neither key trading partners US or Europe recorded a spike in Chinese imports, China's imports contracted a whopping 15.2% Y/Y in February, much more than street estimates of a -8% drop. Combining January and February figures, imports grew 5% yoy, moderately faster than the 2.7% in Q4. The far slower pace of import growth confirms pervasive skepticism toward the Chinese recovery. Import volume growth of many major commodities decelerated.

SocGen summarizes that as a result of the strangely strong exports, China's trade balance recorded the first February surplus in three years of USD 15.3bn, while forecasters looked for a deficit of -6.9bn. The trade surplus in the first two months was much higher at USD 44.4bn, compared with a deficit of USD 4bn during the same period in 2012, which points to a significant positive contribution from net exports to Q1 GDP growth.

Because while goalseeked Chinese GDP will surely benefit from today's trade data, in the zero sum trade world, where unlike global monetary easing where at least for now the whole world can have a free lunch (until such time as the bill comes due), China's GDP gain is its trading partners' GDP loss. Especially if those partners are desperately crushing their currency with every possible monetary intervention.

Sure enough, SocGen's conclusion is in line with these thoughts, and explains why today's superficially bullish data is really quite bearish:

Scepticism towards China's export data will certainly rise again. The bewilderingly solid export data might be the result of disguised capital inflows, as exporters could overstate export amount in order to move more yuan into the mainland. But we do not want to jump to any conclusion at the moment, as there is no clear evidence to either support or dispute such a statement.


However, if these figures were indeed close enough to the actual situation, we think such strong exports may turn out to be more of a curse than a blessing for China. Against the backdrop of a meagre global recovery and heightened concerns over potential currency wars, China's bi-lateral trade surplus with the US, as suggested by Chinese data, reached a record high in four years; and China snatched market shares from neighbours. None of these will be the most welcomed development. Particularly, there is evidence that the People's Bank of China has been intervening to keep the yuan from appreciating.

All this means that with imports due to surge in the coming months, and with rising commodity price inflation on the horizon, the global reflation party has at most a few more months to run before China, once more, is forced to tell the G-7 printers to pull the plug on this latest reflationary effort as it slams China head on (as it did previously in 2011, whose carbon copy 2013 has been so far, to the dot).

As for the US, which is implicitly on the other side of China's gains, a record high trade surplus with the US, means a record high trade deficit from the side of D.C. - something which means either someone is openly making up data, or that Q1 GDP in the US is about to be hit with a sledgehammer following a surge in the March trade deficit.

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carlsbro's picture

No end of the world chart today?

GetZeeGold's picture



The state of the DOW is strong.....go back to sleep.


Dream happy thoughts.

carlsbro's picture

Sure Im going to sleep well. Im not always worring about Obama stealing my gold,  the student debt bubble, the devil FED, the drones, the China housing bubble, the Eurodebt, Bernake, Krugman, DOW so high, the unrecovery, the gun sales, currency wars, silver so low, gold paper, bond bubble, Spain, Italy, Greece, flash crash, QE, Draghi, the yen, BOJ

Dr. Engali's picture

In other words you enjoy your overlords and their assaults against your liberties. Why hang out here if you don't care? Go hang out at yahoo where nothing is analyzed and the statist propaganda is thick.

carlsbro's picture

Cause all of you are sooooo funny.

Im going to ask my overload if I can go out this weekend. Let me see.. no drones in the sky, nice!!

GetZeeGold's picture



no drones in the sky, nice!!


Make sure you send Rand Paul a note of thanks.

Dr. Engali's picture

I may not be funny, but I know how to spell "overlord".

Non Passaran's picture

Then do us a favor: get lost and don't come back.

GetZeeGold's picture



Just a little panic attack....he'll be fine.

old naughty's picture

Curses in, curses out...

as they say, garbage in, garbage out.


abugarance's picture

no one cares anymore about this mother of all faked data, makes BLS curve-penetrated numbers look like the Arch of the Alliance in comparison

smacker's picture

Related to this is what the UK Telegraph says this morning in its daily briefing:

"Stockmarkets have risen overnight as China said its February exports rose by a fifth, Japanese GDP ended a losing streak, and traders bet that this afternoon's US non-farm payroll data will confirm that the world economy is strengthening. The Nikkei broke through the 12,000 barrier as Japan said its economy grew 0.2pc beating the preliminary calculation of -0.4pc which would have been the third consecutive quarter of negative growth. China said exports soared 21.8pc last month from the year before, more than double forecasts, although imports fell 15.2pc. The dollar rose to a three-and-a-half year high against the yen and the Dow Jones hit another record high."

SmallerGovNow2's picture

your negative is my positive depending on who's the spin master...

Dr. Engali's picture

It's funny that China is considered a currency manipulator when all the western central banks of the world are printing like mad men.

GetZeeGold's picture



It's either that....or build empty cities in the middle of nowhere.


I prefer my excess to be portable.

Mountainview's picture

The wealth transfer machine works again... until salaries are globalised... £180.- a month...

SmallerGovNow2's picture

Seems like a reverse spin article.  In the end this is a blip on the radar screen and really means noting IMO...

falak pema's picture

The ongoing fight between economic BEARS n BULLS summarised by these two views in BI tabloid : 


This Year, And Stocks Will Dive


Roubini Calls For Market Fall - Business Insider

and this : The Most Important Dollar Chart In The World Is Saying That The Economic Crisis Is Finally Over

Dollar Becoming Positively Correlated With Risk Assets - Business Insider

I sometimes laff at ZH's editorial contradictions ; but this is really Folies Bergère class! 

Ze greeeeeat splits are back in style in 2013! 

And, we have part of the answer right here : 

Chartist Friend from Pittsburgh: Writers Love Charts Because Readers Can't Read Charts

So much for Dollar's UNUSUAL current positive correlation with risk assets... Nope, that is not true! 

Snoopy the Economist's picture

"Particularly, there is evidence that the People's Bank of China has been intervening to keep the yuan from appreciating."

Have you been watching the fed?

Edward Fiatski's picture

This is the end of the world chart - China's copper imports -27-30%.

Fick Mich!

Oldwood's picture

So does this mean that all of the Chinese made crap is getting even cheaper? I certainly hope so as my income is falling and while i need none of this shit, maybe having two flat screens in my bathroom will make me feel better about myself. Winning!

Floodmaster's picture

i need none of this shit... only if you can live like Diogenes

ilovechina's picture

The trade data is a pile of horse poo

Money is smuggled into china through trade, export invoicing. My name is Bo Xi Lai - you want to bring 1 billion dollars into China mr foreign investor. OK I'll sell you an empty container for one billion, get vat return on it from central government. You put 50 million USD in Singapore for me. Boom, 1 billion recorded as exports.

Money is smuggled out of China through trade. My name is Bo Xi Lai - i need to get 1 billion usd out of China as I am going to be taken down. OK, I'll sell you 2 billion USD worth of goods, you pay me 1 billion, wack one billion in London. Boom, exports under recorded.

Commodity stock piling is hidden through trade account. My name is central government, these pesky americans want the rmb revalued because the trade balanced is in surplus. OK we need to build lots of submarines. Lets import a shit load of copper, wack it in the trade account as imports. make it seems we are not mercantilists. 

foreigners use trade account to get money in themself. hello i am ge and im in bed with bernanke. Lets ramp up inflation in China. OK - lest export an empty container for 2 billion usd. bernanke will give us a loan at 0.5% and we can have it sit in our chinese bank account at 4.5% or ramp up property.

Put hong kong parent companies into the mix. and you'll see trade numbers are fudge. money is no longer real, how can trade numbers mean anything. there is only one indicator folks, WHOS GOT ALL THE GOLD.

The real gold, fake paper gold is pretty cool right now. so it counts at the moment. but when gold goes into backwardation permanently. paper gold will be worth shit as your counterparty will be bankcrupt and incapable of delivering anything to you except an email asking you to contact the usa treasury . and then real gold will spike to its historical fair value sitting around 2400USD. after that who knows. maybe the drones will be able to sniff out gold and send down robots to collect it. maybe by then america would have stolen enough gold from the gold rich countries. 

sorry - the game is not only rigged. its a mess.


Floodmaster's picture

Chinese Parliament Holds 83 Billionaires, Corruption & Lies at is best.

JOYFUL's picture

So bullish is bearish, when it comes to China's booming exports huh?

That's a time when France and it's ZATONIC partners have been reduced to scratching around in the North African deserts for used gold supplies, and building up 'boots on the ground' in anticipation of a need to 'liberate' further societies from the chains of their own sovereignity, it's the Chateau Lafite of hilarity that their bankster analysts can now imitate their upside\down doublespeak to the letter.

Rather than participate in building boring infrastructure projects anymore, such as the Chinese do, the ZOG satrapies of the decaying West now specialise in ah, removing boring infrastruture from the it GDaffs silly African Aquifer, or the unsightly industrial targets which litter the Sudanese landscape...these cadets of the new greenthink gendarmarie have no one to blame but themselves for getting shut OUT OF AFRICA...

which brings us to the irony of our analysts myopia...

that Chinese exports are wayyyyyyyyyyyyy up, even though their export to Euromerika were down, is a braintwisting conundrum for the pencil pushing parisians it seems. The possibility that China has simply started up it's intra-Asian and African trade engines full blast, knowing that the deadbeat West is tapped out, is apparently not a possible solution to the riddle. So let's call up down and white black, and all will be well again in WackoWorldWest.

After all, it now seem that giant  9 foot tall dromedaries once roamed the High Arctic, so why should not Whitey's Tallest Tales take a trip to the Dark Continent>:?

Mountainview's picture

Chinese Exports=US and EU Imports=Wealth transfer