China 2015 Trade Surplus Reaches $594.5 Billions

[Shotgunner51]

13th January 2015

For full year of of 2015, the country registered a USD 594.5 billion trade surplus, further expanded from a USD 382.5 billion surplus for 2014.

China Balance of Trade | 1983-2016 | Data | Chart | Calendar | Forecast

 

[Martian2]

There are only 20 countries in the world with a GDP larger than China's trade surplus.

China's trade surplus would rank as the world's 21st largest economy.

China's trade surplus almost qualifies as a G-20 economy.

----------

By the way, the Turkish Lira lost 1/3rd of its value in 2015. China's trade surplus should be larger than Turkey's GDP next year. China's trade surplus should qualify as a G-20 economy in 2016 or 2017 (depending on the full effect of the Turkish Lira devaluation, because the IMF uses an averaging method).

 

[Martian2]

China Trade Surplus Swells to $594.5 billion | Bloomberg

China Trade Surplus Swells as Exports Rise in Boost for Yuan - Bloomberg Business

 

[LittleFish]

Why is March's surplus so little? We imported too much for Spring Festival?

 

[Martian2]

Why is March's surplus so little? We imported too much for Spring Festival?

It's seasonal. I think it has to do with Chinese New Year. All of the factories are shut down for 14 days.

What happens in Chinese factories during the Chinese New Year? -

----------

Policy Implications

What is the strategic importance of China's $594 billion trade surplus?

As the story goes, someone once asked bank robbers: Why do you rob banks?

The robbers replied: That's where the money is.

Similarly, if the policy-makers in Asia had any brains, they would realize that China has all of the money.

The United States already runs a trade deficit of $500 billion each year. The US is NOT going to buy much more products from Asian countries. The US is at its limit.

On the other hand, China has a gigantic annual surplus that it wants to use up.

To date, only Australia, New Zealand, and South Korea have been smart enough to sign FTAs with China. These three countries in Asia understand that China is "where the money is."

 

[Shotgunner51]

It's seasonal. I think it has to do with Chinese New Year. All of the factories are shut down for 14 days.

What happens in Chinese factories during the Chinese New Year? -

----------

Policy Implications

What is the strategic importance of China's $594 billion trade surplus?

As the story goes, someone once asked bank robbers: Why do you rob banks?

The robbers replied: That's where the money is.

Similarly, if the policy-makers in Asia had any brains, they would realize that China has all of the money.

The United States already runs a trade deficit of $500 billion each year. The US is NOT going to buy much more products from Asian countries. The US is at its limit.

On the other hand, China has a gigantic annual surplus that it wants to use up.

To date, only Australia, New Zealand, and South Korea have been smart enough to sign FTAs with China. These three countries in Asia understand that China is "where the money is."

That's right bro.

Why is March's surplus so little? We imported too much for Spring Festival?

Seasonality pattern of Chinese New Year effect. Exports mostly closing down during the month, so either low surplus or deficit for that month.

See below pattern for last 10 years:

 

[Daniel808]

Damn, That's crazy almost 600 Billions Dollars Surplus, just in one year !
I am speechless.
Keep Hoarding the money Congrats China !

Hope China keep this Surplus to buy Gold in order to save his Gigantic Foreign Reserves.

Can't wait for Chinese New year holiday next month
@Shotgunner51 @Martian2 @AndrewJin @TaiShang

 

[Bussard Ramjet]

Damn, That's crazy almost 600 Billions Dollars Surplus, just in one year !
I am speechless.
Keep Hoarding the money Congrats China !

Hope China keep this Surplus to buy Gold in order to save his Gigantic Foreign Reserves.

Can't wait for Chinese New year holiday next month
@Shotgunner51 @Martian2 @AndrewJin @TaiShang

Actually the foreign reserves are coming down. They are below 3.5 trillion right now.


So let's do a whole money flow calculus.

China's merchandise trade surplus: 600 billion
China's services trade deficit: 220 billion
Total trade surplus: 380 billion

China's FDI received: 126 billion dollars
China ODI invested: 130 billion dollars
Net Non-Portfolio investments ~0

What is hard to measure is financial, portfolio, and other money flows in and out of the country.

But the net money flow must reflect in the foreign reserves. China's foreign reserves have decreased from almost 4 trillion to below 3.5 trillion.

That means rest everything must point to a capital outflow of almost 900 -1000 billion dollars.

Now I know I had this discussion with @Martian2 before. And he also included returns on investments of foreign reserves, and inbound money from reparations. At that time, I was not sure of the calculus. But now I have checked, returns on liquid foreign reserves is actually very less, less than 1%. And the inbound money is already included in money transfers, portfolio flows. What we know is that money is leaving from China like anything, at too rapid a pace.

All right @Shotgunner51 ?

 

[Martian2]

Actually the foreign reserves are coming down. They are below 3.5 trillion right now.


So let's do a whole money flow calculus.

China's merchandise trade surplus: 600 billion
China's services trade deficit: 220 billion
Total trade surplus: 380 billion

China's FDI received: 126 billion dollars
China ODI invested: 130 billion dollars
Net Non-Portfolio investments ~0

What is hard to measure is financial, portfolio, and other money flows in and out of the country.

But the net money flow must reflect in the foreign reserves. China's foreign reserves have decreased from almost 4 trillion to below 3.5 trillion.

That means rest everything must point to a capital outflow of almost 900 -1000 billion dollars.

Now I know I had this discussion with @Martian2 before. And he also included returns on investments of foreign reserves, and inbound money from reparations. At that time, I was not sure of the calculus. But now I have checked, returns on liquid foreign reserves is actually very less, less than 1%. And the inbound money is already included in money transfers, portfolio flows. What we know is that money is leaving from China like anything, at too rapid a pace.

All right @Shotgunner51 ?

The Chinese government is in charge.

The outflow of money is from Chinese owners. They are diversifying their assets. This is easy to stop. If the Chinese government wants to forcefully clamp down on the outflow, it would dry up quickly.

China could also easily reverse the outflow by increasing the interest rate.

The actual outflow has only been net negative $200 billion to $300 billion. China's foreign exchange reserve topped out at $3.7 trillion. The current foreign exchange reserve is $3.5 trillion. Also, China has another $50 billion in gold reserves that are not counted (see The Economist citation in another thread).

By October 2016, China's Yuan will be added to the IMF SDR basket. This means China's currency is officially legal tender for foreign business transactions. Also, China's inclusion in the IMF SDR is expected to bring an inflow of $1 trillion into China.

In conclusion, China doesn't have a foreign exchange problem. The flows will reverse once the Yuan starts appreciating, which is up to the Chinese government. The Chinese government caused the outflow by moving the soft peg from 6.2 to 6.5 Yuans per US dollar. If the Chinese government moved the soft peg back to 6.2 Yuans per US dollar, hundreds of billions of dollars would flow back in. This means the Chinese government decides how much foreign exchange reserves that it wants to keep.

 

[Bussard Ramjet]

The Chinese government is in charge.

The outflow of money is from Chinese owners. They are diversifying their assets. This is easy to stop. If the Chinese government wants to forcefully clamp down on the outflow, it would dry up quickly.

China could also easily reverse the outflow by increasing the interest rate.

The actual outflow has only been net negative $200 billion to $300 billion. China's foreign exchange reserve topped out at $3.7 trillion. The current foreign exchange reserve is $3.5 trillion. Also, China has another $50 billion in gold reserves that are not counted (see The Economist citation in another thread).

By October 2016, China's Yuan will be added to the IMF SDR basket. This means China's currency is officially legal tender for foreign business transactions. Also, China's inclusion in the IMF SDR is expected to bring an inflow of $1 trillion into China.

In conclusion, China doesn't have a foreign exchange problem. The flows will reverse once the Yuan starts appreciating, which is up to the Chinese government. The Chinese government caused the outflow by moving the soft peg from 6.2 to 6.5 Yuans per US dollar. If the Chinese government moved the soft peg back to 6.2 Yuans per US dollar, hundreds of billions of dollars would flow back in. This means the Chinese government decides how much foreign exchange reserves that it wants to keep.

I must say you have done pretty basic mistakes in calculating and evaluating foreign reserves. I am busy right now, will give a detailed reply in the evening.

 

[Martian2]

I must say you have done pretty basic mistakes in calculating and evaluating foreign reserves. I am busy right now, will give a detailed reply in the evening.

Give me a break.

China does not have to keep large reserves.

In October, China's currency is an official reserve currency.

Does India need hard currency reserves? Yes, to pay for imported oil.

Does China need hard currency reserves? No. In October, China's currency is a hard currency.

Get it?
----------

Russia just one-upped the Saudis in China - Business Insider

“Russia just one-upped the Saudis in China

• Elena Holodny
• Jun. 23, 2015

Following Russia’s recent acceptance of the renminbi as payments for oil, we expect more record high oil imports ahead to China,” Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura Holdings Inc., told Bloomberg.

 

[STEVEN囧]

The exchange rate between CNY and USD moved from 6.2 to 6.5,it is a good news for export-oriented enterprises.
It will increase the competition and bring negative influence to emerging economies and export-oriented countries.If the depreciation is too much,it could cause the currency war and who will benefit more from this round of depreciation..you could guess who is counting dollars happily..

 

[cirr]

Actually the foreign reserves are coming down. They are below 3.5 trillion right now.


So let's do a whole money flow calculus.

China's merchandise trade surplus: 600 billion
China's services trade deficit: 220 billion
Total trade surplus: 380 billion

China's FDI received: 126 billion dollars
China ODI invested: 130 billion dollars
Net Non-Portfolio investments ~0

What is hard to measure is financial, portfolio, and other money flows in and out of the country.

But the net money flow must reflect in the foreign reserves. China's foreign reserves have decreased from almost 4 trillion to below 3.5 trillion.

That means rest everything must point to a capital outflow of almost 900 -1000 billion dollars.

Now I know I had this discussion with @Martian2 before. And he also included returns on investments of foreign reserves, and inbound money from reparations. At that time, I was not sure of the calculus. But now I have checked, returns on liquid foreign reserves is actually very less, less than 1%. And the inbound money is already included in money transfers, portfolio flows. What we know is that money is leaving from China like anything, at too rapid a pace.

All right @Shotgunner51 ?

Down because China is making overseas investments right and left。

A friend of mine bought a house worth over 2 million pounds in Chelsea，London Oct this year（smart move considering how expensive good properties have become in China's major cities - gross yield has fallen below 1.5%）。

This is just a tiny example of where the “foreign reserves” have gone。

 

[Martian2]

The exchange rate between CNY and USD moved from 6.2 to 6.5,it is a good news for export-oriented enterprises.
It will increase the competition and bring negative influence to emerging economies and export-oriented countries.If the depreciation is too much,it could cause the currency war and who will benefit more from this round of depreciation..you could guess who is counting dollars happily..

I read that China's depreciation of the Yuan was intentional.

China wanted to weaken the Yuan a bit. As host of the G-20, China planned to move the Yuan back up in value later in the year.

The market over-reacted. An analyst said China was in the politically beneficial position of intervening in the market to support the value of the Yuan. The US always claimed that China was manipulating its currency weaker. Well, we have an example now of China pushing the value of the Yuan up.

 

[Bussard Ramjet]

Give me a break.

China does not have to keep large reserves.

In October, China's currency is an official reserve currency.

Does India need hard currency reserves? Yes, to pay for imported oil.

Does China need hard currency reserves? No. In October, China's currency is a hard currency.

Get it?
----------

Russia just one-upped the Saudis in China - Business Insider

“Following Russia’s recent acceptance of the renminbi as payments for oil, we expect more record high oil imports ahead to China,” Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura Holdings Inc., told Bloomberg.

There is no definition of "official" reserve currency. Banks and other financial institutions don't have to refer to IMF to make their decisions.

As for paying for oil, yes, even China needs dollars for that, because its currency isn't mature and widely traded. Rather, even AIIB, a Chinese Bank is denominated in dollars.

Down because China is making overseas investments right and left。

A friend of mine bought a house worth over 2 million pounds in Chelsea，London Oct this year（smart move considering how expensive good properties have become in China's major cities - gross yield has fallen below 1.5%）。

This is just a tiny example of where the “foreign reserves” have gone。

Yes, this is an example of portfolio investments. And it is NOT advantageous to China, because money is leaving China, and in many cases, even the owners of the money may migrate out of China after owning some property. These are not government owned assets, these are assets owned by individuals, who will not follow the government's diktat, and in the particular case of developing countries like India and China, may even leave the country.