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Watch Out For Falling Objects: US Share Of Total Chinese Exports Plunges To All Time Low
We posted this chart previously, but it deserves repeating, for one reason: whereas conventional wisdom in the past was the due to the mutual assured trade destruction between China and the US (with China overly reliant on the US consumer and market for its exports, and the US desperate for Chinese purchases of US bonds as a USD-recycling and, more importantly, deficit-funding pathway), perhaps now that exports to the US as a percentage of total Chinese exports have fallen to an all time low, and with Chinese purchases of US bonds stagnant of 18 months in a row as the Fed's monetization of US paper has replaced the marginal Chinese demand, perhaps it is time to rethink the increasingly unstable MAD Nash Equilibrium that exists between the countries: first in trade, and soon in all other aspects of socio-economic relations.
Source: Diapason
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Behold, the collapse of a World Reserve Currency.
Ouch. That's gonna leave a mark. Really.
If the Fed's sole purpose was to save the banks, it might be OK. If indeed they are trying to save the economy too--I don't necessarily buy into this notion--then they will continue to get us deeper into trouble.
Maybe people are done being consumers. </humor>
Lest anyone be tempted to ignore plain reality, we all fall down together in this interconnected & interwoven as never before world, and China is in as precarious financial & economic position as the U.S., if not more so (and as bearish as I am on the prospects for the U.S., I'm in the China is worse off camp).
Before anyone reflexively tells me that I'm crazy for stating this, look at the headline that ZH just published below this article, and tell me if it's illogical to point to an arguably causative correlation between:
US Share Of Total Chinese Exports Plunges To All Time Low
-and-
China's Economy Off To Weakest Start Since 2009China has a billion plus citizens that will be future consumers of their own goods.
I've been hearing that for 10 years now.
China's problem is that they have to grow their domestic citizenry's purchases of Chinese made goods at a rate much faster than the rest of the world is cutting back on the consumption of same AND at a rate that allows for the creation of net new Chinese jobs in the face of things such as incredibly growing rates of automatization (see Foxconn's strategic plan to replace half their workers through automatization within a few short years as an example); to add complexity to this issue, Chinese business owners who are able to wrestle free of state control (i.e. they no longer believe state subsidies are worth accepting on balance) are increasingly moving their production facilities outside of China.
There's a whole other set of crises China is facing, as evidenced, using just one recent example, by the fact they literally already feel the need to build Krugman-approved, massively expensive "ghost cities" just in order to wage a battle to keep unemployment from rising, however marginal the benefits are (and in the very shortest of terms).
When that mentality sets in, before you know it that pile of "wealth" everyone thought you possessed is getting pissed away really quickly in the form of [mal]investment that is so epic, it really would make Krugman's proposed 77 trillion USD "When Mars Attacks" deficit-funded and debt accretive stimulus plan look less batshit crazy.
http://www.youtube.com/watch?v=g8t4gdsJfFM
Could be very good IF China was also importing more from The US. The problem is, they aren't in the market for Credit Default Swaps..
Now you're cooking with peanut oil! Ppl would do well to create a list of countries who did and did not buy CDS's.
Germany, Canada, Russia, India, China... did Not.
The UK, Spain, Italy, France... did.
You do the math, CSI, and crystal ball gazing.
this explains beautifully why wall mart is having trouble resupplying
empty shelves coming soon..
As I remember reading here, once the USD - Chinese goods conveyor belt stops, the Chinese will send back currency like a tidal wave.
Is that happening now?
China's exports to the US are falling. Exports to Mexico are growing. Mexico relables the crap and sends it to the U.S. Ditto everywhere.
There's a trade war, at least, on the way.
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100023283/an...
no, they won't... the Chinese are already starting to use robots to replace line workers because (get ready for it) the robots are cheaper than even the _Chinese_ labor rate.
If you think things are sporty at Foxconn now wait until _that_ trend really digs in and takes hold.
No, they won't unfortunately. To be a consumer, you need two things (1) Disposable income and (2) Somewhere to store your stuff. Chinese cities are going the same way as Japanese cities did in their modernisation, real estate (apartments) is becoming smaller and more expensive, thus reducing disposable income and space to store stuff. To become a consumer economy, you need bigger houses cheaper, like Houston.
I think this is an excellent general point you make (although I believe there are few similarities between Japan & China as of now, where China's real estate market is in an epic, speculative bubble), and is the reason why China deliberately copied the U.S. interstate highway system model in such a close manner, when they could have chosen to implement some form of mixed/hybrid alternative transportation system with a much heavier focus on mass transit, instead.
I'm not saying China hasn't built out a relatively modern mass transit system, but rather, they could have built it out to a much larger degree, which would have reduced future dependence on passenger vehicles and eliminated the need for many of the roads they did build and still are in the process of building.
Really? Not as long as they stay a centrally lead communist state. The problem for China is that they didn't create a middle class big enough. If they want to do that, they need to led go of communism. They other day the Chinese leader said that he wanted to improve the lives of the Chinese. They need to let go of the stranglehold that the political system has on its population and that will not happen easily.
"The problem for China is that they didn't create a middle class big enough."
Had this been their intention, they wouldn't have been "the factory for the world" since the moment that Papa Bush alley-oop'd the China Most Favored Nation Trade Status into the air and Clinton slam dunked that ball.
I think the reason China isn't worried about this is because in a communist nation, the citizens and their comforts are expendable. Yes, China has a billion people, but they are people who will accept deprivations and hardships much more willingly than people in the western world. In other words, China's going to throw a wall of humanity at the problem, while the western world riots because their unions couldn't negotiate a pay raise, an extra holiday, and longer coffee breaks as the world around them burns.
You are correct and incorrect, as China will, when the crash comes (gets much worse) they will have a huge manu. base and a boat load of gold. They will have issues as well, but not like the bankrupt nation and people that the US will be/is with little manu. base, prerequisite skills or gold for investment. And the US will be burdened with a rogue government that will be the pariah of both the American people and the rest of the world.
hujel
Fuck you China you ancient nuclear war mutants.
More like the birth of a one world currency. After the U.S. blows up, the rationale will be that no single country can be trusted with the priviledge of holding reserve currency status. It's biblical.
How could the authorities not see this happening????
Smirk, chuckle, snort-snort:)
Just how do you propose that they can justify a single currency after watching the EU crash and burn? No country will trust another.
Anything can be "justified" it just depends on who is "justifying"...
How about Silver as the reserve currency? IT could be revalued at say....$55,000 per ounce.
Neither gold and definitely not silver - not by themselves, you can forget about that. It's pretty obvious no one will be willing to trust a single item as reserve currency again, if/when the dollar collapses or is "retired" before so.
so how do japan and saudis feed themselves with their food security situation?
What does that got to do with anything?
PPL will demand it
Really? You mean the ones that laugh at and turn down free gold coins? And when was it the last time people got what they demanded?
Thats the point. It will more than likely be backed by a basket of currencies and commodities. The weighting probably determined by the Bank of China, IMF and our glorious Fed.
because it will be gold backed.. the reason big chunks of metal are moving between sovereigns in the shadows.. using paper to suppress price discovery until they finish splitting it all up in a fair way then boom reset new world currency.
I'm sure the Brits thought the same thing when we were kicking their asses. There won't need to be a world currency, the yuan will do just fine.
"More like the birth of a one world currency"
and that has worked so well with the Euro
No one is saying it's a good idea, or that it will be a success. Since when does logic, or probability of success, enter the equation whenever a Central Bank is involved?
That's precisely what the US has been trying to prevent. Careful, the last person to suggest that the world reserve currency should be a basket of currencies from developing nations and commodities (SDR) was a guy staying at the NY branch of Sofitel.
Q aka 'God' told Captain Jean-Luc Picard, who told me, that there is no such thing as fulfilled prophecy. Only SELF-Fulfilled prophecy.
Re one world-currency... You will be that currency. With... "intel inside".
You won't be buying or selling jack w/o your digital and bio-signature getting scanned.
Gold and silver will be valuable, but you can stop masturbating to any fantasy of a get-rich-quick play on PM's. They are WAY ahead of you on that curve. You would be well advised to balance your material and life assets in other ways too.
> They are WAY ahead of you on that curve
I don't think so. I have more than my "fair" share...
Pawnman
there already is a currency that is not tied to anyone nation.....that holds gold as a reserve asset, in large quantities...that is ready when the dollar fails...
We are in a recovery!! The Good Times have returned! It's a great time to buy stocks. Sell the barbarous relic and buy more paper!
</sarcasm>
exactly. the conventional wisdom of a strengthening USD in recession or slowing trade doesn't hold whenthe surplus countries already have accumulated massive excess reserves and the US is no longer the dominant consumer of exports. the "hyperinflation" will be China and others shunning USD and US bonds fro globally diversified assets, preferably physical....
I have half a mind that Chinese backs funds have painted the tape down on GLD and up on scams, only to reverse hard and catch our reflexive MOMO "investors" wrong footed and leaving us with Scamazon stock and the inability to afford future imports...
"dollar rally is conventional wisdom"? really? show me where anyone is predicting that (other than me and i don't count.) again...WHO IS THE MARGINAL BUYER not seller. You have to look at the PRODUCTS before going "slap happy with your chart porn." what in actuality are you buying when you buy "made in China"? are YOU arguing "top of the line"? if so..."go ahead and argue it then."
I'd respond, but I cannot make sense of what you are asking. Commodity currencies do fare poorly in recessionary period. USD is massively overvalued as global reserve and will be until those with large surpluses decide they are tired of having their people work 60 hours a week to survive while we pay people to sit idle.
FWIW, there will be tension in stock versus flow. Japan is f'k in terms of flows moving forward, but has built a big cushion / stock of foreign exchange reserves (and is probably wishing more of it was in physical assets about now). Europe is just F'kd (same flow problems, although smaller but much less net savings/surplus). The US (aka the cleanest dirty shirt) has huge and accelerating debt, large CA deficits. but, we do have better demographics and natural resources. Going to be a painful adjustment, but we'll be okay long term.
We are entering geoploitical phase transition....
I have half a mind also and think the same thing. Together, we gotta be right.
This could be result of China's policy of limiting exposure to US or US economy contracting and completely tapped out US consumer. Quite possibly the both.
Welcome to the 'statistical' recovery here.
The China's export story does not make sense either. Maybe some Chinese game the export subsidy by running loops through their ports?
They've already started spinning this a few days/weeks ago...
Such as: Americans are now looking for Made in USA sticker on junk they buy and Apple is making Macs in America.
So see, no need for Chinese goods anymore. Problemo Solved.
actually there is some truth to that. i go to local auction houses every couple of weeks, and right before christmas one of those distributors that sells nothing but made in china stuff had piles upon piles of NIB toys they were trying to auction off. nobody wanted any of it, they guy was litterally having to give stuff away just to get people to bid. this was a small rural auction house, most of the people there were what most people would call poor or lower income, and this guy was having to bundle 8-10 items together that would sell for around $10-$15 each in a store. those bundles were going for $8-$9 each, you should have seen that guy sweat, lol. nobody wanted any of his chinese crap. after the guy managed to auction off all his stuff, the regular kind of items i normally see there started coming up for bid, and thats when hilarity ensued. he had to sell 10 toys bundled together for under 10 bucks and people were getting in bidding wars over used bowling balls and fishing rods, that guy was PISSED. people have opened up thier eyes and they dont want the chinese crap unless they are getting it for next to free.
its not a real reason chinese exports are way way down, but it does show that american attitudes towards china-mart are changing.
Now that Chinamart is being trashed people better be ready for higher prices. Unless of course homeland wages and maintenance of the robot workers can keep costs down.
Toys are not selling anywhere. The kids all want electronics these days.
This chart could probably be renamed "U.S. Consumer Spending" without making any changes to it. Welcome to the "recovery".
Wait one minute; the employment in US is at 4 year low. Thus, people should have money to spend at Walmart.
Which bull$hit numbers to believe?
Ghost town time sharing bitchez! All part-timers with Bernanke bucks fill up those empty 64 million appartments in China and extend Ponzi's life for another 3 months.
The Chinese have grown tired of funding our idle workers on 99 week unemployment and the record setting foodstamp rolls.
Are these the same SNAP recipients buying all their crap? Perhaps I will only accept gold in exchange for the next shipment of soybeans. Humanity isn't just another ponzi, it is the fuckIng ponzi. Everyone need s to be careful what they wish for.
Laws
May I suggest you might accept fiat for what you will need to spend in the short term and then buy gold for your savings? Until we stop living in a fiat world you will need some of that excellent Medium of Exchange. Just don't confuse it with something that preserves value over time.
I'm a flatbed trucker and I can usually feel the pulse of the economy.
A lot of steel fabrication is coming back to the U.S and a few of the plants I recently visited are hiring back the workers they laid off.
Nucor recycling operations are kicking ass and taking names in the steel industry. Why in the world would anyone want stuff from China that's barely worth using for rebar when they can get the good stuff here at home for less cost?
The US trade deficit is about 28 million ounces of gold per month. Who wants to hold fiat currency of a country that emits over $80B of digtal paper a month?
I remember the first time i saw a made in china tag.......looks like their run is over
I just decided to pull my mothballed pet rocks to online Federal Reserve liquidity bidding. Wish me luck. /sarc
But according to Bloomberg, China is off to it's slowest start since 2009. Hand & glove w/USA declining imports, and if you think their exports are down to us, exports for them to Europe are much worse.
Trade will increasingly be amont "developing nations" with natural or huma capital resources. Our biggest export to china is scrap...
And all according to plan:
http://www.atimes.com/atimes/Global_Economy/NK27Dj02.html
We don't need no stinking Chinese junk!
Just another sign of the real underlying weakness of the US economy and that the recent market upward momentum is nothing more than a fed induced sugar high. We will get a Wily Coyote moment sometime in this farce formerly called a "market" (when??) and it will rip the faces off of anyone stupid enough to be "invested" in it.
jmfo
Well then, they better hurry up and buy some more treasuries. Fuck the Chinese junk and all the centrally planned communist horseshit.
RESERVE CURRENCY = TRUST?Just look at the bimbo-politicians trying to run Washington.Not even a budget in how many years?And both parties literally hate each other with spending being out of control.There's no trust in that crap by any other governments or corporations worldwide.It's a national disgrace the way these crooks have treated ordinary working folks.They have no respect for veterans who fought for America either.Don't get me going on how they treat old people,minorities and those suffering from disabilities.These politicans and their bankster buddies are nothing but goddamn gangsters.
No growth for you! ..
at least our housing sector is picking up ...Aretha Franklin style "shit."
Drones are the weapons of choice for Obamacare death panels.
I love how the USA has had to endure years of criticism for going into debt buying cheap Chinese junk and OMG this will be the end of the USD as reserve currency, yet when the USA gets its act together and stops doing that it's OMG the US has stopped going into debt buying cheap Chinese junk so it's the end of the US dollar as reserve currency.
Seriously people, make up your damned minds.
its the petrodollar link which is key; as it is king commodity. Buying cheap chinese junk created a surrogate giant that fed Oligarchy profit (Apple/Nike/Walmart model); generating huge profits that created the middle class first world demise, but allowed huge consumer boom in US/First world and secured a potential enemy into $ world; both high priority on Oligarchy agenda
Now the giant has grown so big he is a strategic threat and outsourcing rhymes with barbarian at the gates. But then the uber model was supposed to work like : we change the barbarian slave for another if we control the game. Thats what hubris begets.
With debt like this the game may be over...its an old story so its worth repeating how it ended.
But then they say that Shangrila is just around the corner! And the US is back in the saddle. Whoopeee...Destry rides again.
This is a massive change in the US-China trade defict as a percentage of total China exports. I don't recall seeing any indication of a similarly gigantic reduction in the absolute size of our own trade deficit with them, though. This change reflects production growth and market expansion for China . . . suggesting they need us less than they used to and will likely need us even less in the future, even as our trade deficit remains relatively high.
You Are A Slave Part 1 <- Watch
"Saturation!"
China is in deep shit.
China will be in deep oil. When they send ppl to work in the oil fields in the Middle East. Dubai, Emirates and Kuwait will become their 2nd home.
What I found interesting is the fact that not only have CHEXUS:IND (China exports to US) but the total exports CNFREXP$:IND out of China have fallen.
Bloomberg charts
http://www.bloomberg.com/quote/CNFREXP$:IND
http://www.bloomberg.com/quote/CHEXUS:IND
These are Index numbers and I am not sure I have the "correct understanding" of what the Indexes represent.... the Bloomberg definitions are not real "precise" to me.
So if you go to FRED and pull up the Goods, Value of Exports for China (VALEXPCNM052N), data courtesy of the IMF, you get a very different looking graph shape.
http://alfred.stlouisfed.org/series?seid=VALEXPCNM052N
edit the is the link for the value of Import to China..
http://alfred.stlouisfed.org/series?seid=VALIMPCNM052N&cid=32329
So it appears the CHFREXP$ index is net (exports- imports), the defination kinda supports that. (China has to import oil etc and those prices have gotten steeper....), the net value of export -import has fallen..... hence the decline in CNFREXP$:IND (did I get that right??? )
I wonder what role the FOREX is playing in this "graph shape"(CHEXUS/CNFREXP), we have a little currency war at play might we be seeing some of the effects?
Irrelevant statistics and conclusions! Direct trade has less and less meaning in the global supply chain. (Think Chinese parts exported to Malaysia still ending up in the US.) I enjoy funny comments and understand that some people need to vent anger at China. But just that is not really worth reading!
China export to the U. S. in Feb up 14.4% yoy though. Not sure about this data.
China is doing what ZH'ers are doing: converting fiat FRNs into real assets. They keep buying vital resources and companies in the US.
Same thing we've been doing abroad for decades.
Shhh! Let's not spoil the fun of reading these xenophobic comments from people who clearly have no clue that the chart shows the US has actually been demoted as a trading partner. Buy Made in USA! Buy treasuries! Buy war bonds! No more cheap crap! We want expensive crap! No, we want used expensive crap! The more we print the more our enemies will suffer! Yay!
When future generations of Americans ask what the fuck happened to their country, they can copy this page and show the comments. It will all be clear then.
Is it any wonder that some of the large retail chains (includig Home Depot and WalMart) have large stock outages?
I've seen that too. But would that not be Walmart not buying? For whatever reason.
I hope Africa is getting a bigger share of Chinese exports.
Just same old, vendor financing model and eventual destruction of local production by dumping of goods.
Same argument when USAID sends loads of food and undercuts African farmers.
My prediction...China will implode...Likely as soon as all of those multi-generational savings go up in the smoke of thier fake real estate market!!
Any of you bitchez that hug gold and bet against the United States will have a bitter harvest when the US is shown once again to be the greatest country in the world!!
My net worth is going up at a 45 degree angle....God Bless America!!
I agree with you that China will implode, however why do you think people holding gold will suffer? With a 300% plus increase in M2 money supply, there WILL be inflation. No matter how much The Bernack wants to deny it. REMEMBER the Bernack didn't see the housing bubble before it bursted either and said, "We've never had a decrease in housing prices in our history."
With the enormous amount of money printing, gold will go up! UNLESS the Bernack continues to short it big at 8:00 am every morning.
It's not so much that gold may go up....Its that money may go down....There is a basic difference!!
My opinion is that gold is a store of value and not an investment.....Basically, the best you can do is break even....With Gold near an all time high, the dollar set to surge because of our strong economy (In relation to everyone elses), and fear draining out of the market, I think you could lose a lot of money in the short term....Gold is better than cash, but it badly underperforms almost any other investment....
The last housing collapse happened when 1.) Supply badly outpaced demand and 2.) Lots of people had 0 down stated income loans bought at the inflated top of the market (In other words they were time bombs) Right now, both of these factors are at the opposite end of the cycle....Housing goes up!!
I think ZH is doing a great dis-service by making people think PM's are an investment...At best they should by 20-30% of your diversified portfolio
If your not tracking your net worth you NEED to weekly....Then set goals and drive it upward....That process will teach you a lot if taken seriously....
There is in fact a big difference, which the previous poster seems not to understand, betwen gold (or anything else) going up in PRICE, and going up in VALUE. Yes, of course, as all fiat currencies continue to be depreciated by their issuing governments (all of Orly's 'no inflation' deflationary nonsense to the contrary), gold will continue to increase in price, but that does not necessarily imply that it will continue to increase in value.
Military arrest of Bernanke and Federal Reserve operations turned over to the US AirForce.
so who is buyin theri shit then? Europeans...naaa, Aeseans ;-)... well just a wish but naaa, Marsmen well mby soon but not just yet..., so who then is it that want more crap to stuff?
Trade War on the Way