Over the weekend we got Chinese trade data that showed the economy is stabilizing.
But we also noted a modest improvement in exports to the U.S. which were up 6.1% on the year, compared with 5.3% in July.
Societe Generale’s Wei Yao pointed out that a look at Chinese imports from the U.S., compared with Chinese exports to the U.S., suggests that China is missing out on the U.S. recovery. She explains why this is happening.
“One interesting trend we have noticed is the enormous underperformance of China’s exports to the states versus China’s imports from the states. The former has been growing faster than the latter for 15 months — the longest streak since China entered the WTO in 2002, and the difference between the two growth rates has averaged around 13ppt so far this year. It looks as if China missed out on the US recovery.
“Several dynamics may be at play, including the relocation of low-end manufacturing from China to neighbouring emerging countries as well as the regained competitiveness of the US itself. China will still benefit, if the US economy continues to improve. However, it may not be a factor strong enough to support a sustained growth recovery of the Chinese economy anymore.”
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