China Exports, Imports, Economy Down

In November China’s exports declined the most since 1999 and its imports declined the most since they began keeping monthly records:

BEIJING, Dec 10 (Reuters) – China’s exports and imports shrank unexpectedly in November as the world’s fourth-largest economy slowed in a startlingly abrupt way in response to the global credit crunch.

The drop in exports from year-ago levels was the largest since April 1999, while the decline in imports was the steepest since monthly records kept by bankers began in 1993.

Other Asian export power houses, including South Korea and Taiwan, had already reported a drop in shipments last month as the shock to confidence that followed the collapse of Lehman Brothers in mid-September reverberated through the world economy.

Economists had expected China’s exports to rise 15 percent and imports to be up 12 percent compared with November 2007. But the data showed exports fell 2.2 percent from a year earlier and imports dropped by 17.9 percent.

Because Imports shrank so much faster in November than exports it resulted in China running the largest trade surplus ever at $40.1 billion for the month.

To understand the Chinese authorities’ concern about the situation it helps to remember that they believe that China must maintain a growth rate above 6% per year just to avoid civil unrest. China’s exports account for 60% of the growth in the country’s GDP.

China’s trading partners are concerned that China will try to export its way out of its economic problems, exploiting any means necessary to do it. The main concern is that the Chinese will devalue the yuan which most non-Chinese experts believe is already undervalued. Chinese leaders denied this vehemently. Washington on the other hand wants the Chinese to allow their currency to strengthen.

I can’t think of anything more likely to provoke a trade war than a devaluation of the yuan. The new Congress is even less sympathetic to China’s staggering level of exports to us than the previous one has been. If their attention can be distracted from the transition that is.

However, it needs to be pointed out: China’s leadership doesn’t know how to cope with recession any better than ours does. Maybe even less since they’ve never faced one before.

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Dave Schuler
About Dave Schuler
Over the years Dave Schuler has worked as a martial arts instructor, a handyman, a musician, a cook, and a translator. He's owned his own company for the last thirty years and has a post-graduate degree in his field. He comes from a family of politicians, teachers, and vaudeville entertainers. All-in-all a pretty good preparation for blogging. He has contributed to OTB since November 2006 but mostly writes at his own blog, The Glittering Eye, which he started in March 2004.


  1. Brett says:

    They’re already doing things like increasing export tax rebates and the like, designed to help exporters. I wouldn’t be surprised if they did eventually devalue the Yuan.

    Of course, the Chinese government (at least at the top) isn’t a collection of idiots. They must know that if they try too obviously to export their way out of a crisis, it could cause protectionism.

  2. Brian says:

    It very well may be a while, but China may figure out yet that some things are too big to control.

  3. Drew says:

    “However, it needs to be pointed out: China’s leadership doesn’t know how to cope with recession any better than ours does. Maybe even less since they’ve never faced one before.”

    Exactly correct. China’s low currency value -export + invest excess savings a/c weak internal demand economic model is well known and has served them well for years.

    But globally weak demand is new and a flumoxing event for China. And few appreciate the internal tensions China faces.

    Worth keeping a close eye on. A real live powder keg perhaps?