China Set to Swing from Trade Surplus to Deficit
by ilene - September 25th, 2009 5:07 pm
Scariest Headline of the Week: China Set to Swing from Trade Surplus to Deficit
Posted by TraderMark at Fund My Mutual Fund
Based on what Julian Robertson said yesterday, and the fact we all know America is playing with fire – this CBSMarketwatch story had to be the scariest headline of the week. I don’t know how realistic it is, but if China eventually turns into a net importer rather than exporter (which is where they need to take their economy in the long run) … without a commensurate massive increase in savings in the United States – it will be time to call in Scooby Doo: "Ruh Roh Raggy!" The fact they could potentially be moving to net importers as early as next year? First time I’ve heard that.
- China is emerging as a key export destination for Asian economies faster than many expected, thanks to the impact of rising income levels and government stimulus on the nation’s consumption.
- But as import growth continues to outpace the nation’s export growth after bottoming out earlier this year, the world’s largest foreign-exchange accumulator is now on a path to start reporting
trade deficits soon, according to Eric Fishwick, head of CLSA Asia-Pacific Markets’ head of economic research. - "China will be recording, at the current run rate of exports and import growth, monthly trade deficits early next year or the turn of the year," Fishwick said Monday at the CLSA Investors’ Forum 2009. "What is remarkable about its composition of imports is not just the pace, but the breadth. Nearly everything is going up at more or less the same sort of rate."
- Official data released earlier this month showed that China’s exports slumped a larger-than-expected 23.4% in August from the same period a year earlier, while imports narrowed by a margin of 17%.
- Fishwick said trade data released by other emerging countries in Asia show that China has been a big importer of a range of other products, outside of commodities, including motor vehicles and parts, along with other consumer durables and electronic products.
- The trend bears out in other nations’ trade statistics as well. Singapore,