Watch Out For Falling Objects: US Share Of Total Chinese Exports Plunges To All Time Low

Tyler Durden's picture

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

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
sitenine's picture

Behold, the collapse of a World Reserve Currency.

RockyRacoon's picture

Ouch.  That's gonna leave a mark.  Really.

Thomas's picture

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.

Fish Gone Bad's picture

Maybe people are done being consumers. </humor> 

TruthInSunshine's picture

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


China's Economy Off To Weakest Start Since 2009
PAWNMAN's picture

China has a billion plus citizens that will be future consumers of their own goods.

TruthInSunshine's picture

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.

philipat's picture

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..

Kirk2NCC1701's picture

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.

Half_A_Billion_Hollow_Points's picture

this explains beautifully why wall mart is having trouble resupplying


empty shelves coming soon..

Raymond K Hessel's picture

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? 

Stuck on Zero's picture

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.


post turtle saver's picture

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.

o2sd's picture

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.


TruthInSunshine's picture

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.

Joe A's picture

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.

TruthInSunshine's picture

 "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.

archon's picture

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.

kchrisc's picture

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.


Wile-E-Coyote's picture

Fuck you China you ancient nuclear war mutants.

PAWNMAN's picture

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. 

ISEEIT's picture

How could the authorities not see this happening????

Smirk, chuckle, snort-snort:)

Snoopy the Economist's picture

Just how do you propose that they can justify a single currency after watching the EU crash and burn? No country will trust another.

bigkahuna's picture

Anything can be "justified" it just depends on who is "justifying"...

dick cheneys ghost's picture

How about Silver as the reserve currency? IT could be revalued at say....$55,000 per ounce.



thisandthat's picture

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.

Half_A_Billion_Hollow_Points's picture

so how do japan and saudis feed themselves with their food security situation?

thisandthat's picture

What does that got to do with anything?

thisandthat's picture

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?

PAWNMAN's picture

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.

scatterbrains's picture

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.

Go Tribe's picture

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.

imbrbing's picture

"More like the birth of a one world currency"

and that has worked so well with the Euro

PAWNMAN's picture

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?

YHC-FTSE's picture

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.

Kirk2NCC1701's picture

Q aka 'God' told Captain Jean-Luc Picard, who told me, that there is no such thing as fulfilled prophecy. Only SELF-Fulfilled prophecy.

Kirk2NCC1701's picture

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.

Non Passaran's picture

> They are WAY ahead of you on that curve

I don't think so. I have more than my "fair" share...

lasvegaspersona's picture


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...

Croesus's picture

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!


techstrategy's picture

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...

disabledvet's picture

"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."

techstrategy's picture

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....

tenpanhandle's picture

I have half a mind also and think the same thing. Together, we gotta be right.

FinalCollapse's picture

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?

ss123's picture

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.


El Crusty's picture

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.