Chinese Trade Surplus With U. S. Increases

China’s economy is continuing to recede. Or it’s turning around. Or it’s begun to recover again. It all depends on who you read. In the month of March the trade surplus China runs with the United States increased again:

HONG KONG (MarketWatch) — China’s trade surplus widened to $18.6 billion in March, up from $4.8 billion in the prior month, as imports contracted at a faster pace than exports, according to a Friday report by Xinhua News Agency, which cited figures by the General Administration of Customs. Exports contracted 17.1% from a year earlier after falling 25.7% in February. Imports slumped 25.1% on year, after falling 24.1% in February. The March figures mark the fifth straight month of declines for both import and exports. Analysts at J.P. Morgan said the data indicated the pace of contraction in exports had moderated from levels in January and February, while imports were also showing slight improvement.

Materially the same story is being reported as “China’s trade decline eases” by the Associated Press and even as “U. S. trade deficit declines” by the New York Times.

Unfortunately, none of the stories gives us enough information to make a judgment about what’s actually happening. China’s exports to the United States didn’t decrease as much in March as they had in January or February. China’s imports from the United States declined even more than exports did which means that their net trade surplus with us increased.

However, China’s imports from other countries take two forms: imports that are intended for purely domestic consumption and imports that will be processed into exports or otherwise used to produce exports. When those decline it’s a signal of further declines in exports.

None of the stories distinguish between the two forms and, consequently, it’s rather difficult to draw any solid conclusions from them. The observations in the official Chinese press from Chinese economists are particularly puzzling. Apparently, Rosy Scenario has a Chinese cousin.

Time’s story on China’s economy ends on a sour note:

Pettis of Peking University says China’s economic problems are just beginning rather than beginning to end. “There’s no letter in the alphabet that could be used to describe where I think the Chinese economy is going,” he says, arguing that it will be many years before the global trade imbalances that caused the current crisis are redressed. In the meantime, China will get little help from the world —nor will China be of much help to the rest of the planet.

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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.