China's Export Numbers Miss Expectations

[zeronet]

You know nothing about economics, it seems. Liquidity in domestic economy will be due to local currency. Rather, the situation is totally different with the PBOC trying to simulate the economy and injecting liquidity in the market where it is required, and trying to cool hot asset bubbles.



A very small reason.

The main reasons are these:
1. Currency Depreciation: Euro and Yen have depreciated heavily giving Japanese and European exporters cost advantage. Yen has depreciated by as much as 45% since 2012 against the Yuan. PBOC isn't trying to depreciate in fear of capital outflows, and their strategic objective to make the currency get reserve status.

2. Trade Protectionism: Gone are days when free trade was the game in town. Also a decade back, China was a small player so its surplus and trade didn't pinch, especially since their economies were rather good. But now, China has become the poster boy for getting trade benefits, and everyone seems to be going protectionist against China. The biggest industries being hit by this is Solar Panels, Steel, and the like.

3. Loosing Competitiveness:
Due to rising wages, enforcement of standards etc.

A very small reason? Kidding me.
For this year, Chinese Yuan rises up by about 14%, while Chinese export for 1st quarter 2015 combined still rises up 4.7%. Don't forget the world's trade value has been dramatically shrinking so far for this year. That means the market share in terms of value for Chinese goods is expanding rapidly. Look at your India's case, you got 13% export down YtoY for Jan and Feb combined, that is 17.7 percentage points lower than China. However, u guys are still smart enough to generate beautiful "growth" data to become the "fastest economy growing" country in the world, the title India has been dreaming for a long time.

 

[Bussard Ramjet]

A very small reason? Kidding me.
For this year, Chinese Yuan rises up by about 14%, while Chinese export for 1st quarter 2015 combined still rises up 4.7%. Don't forget the world's trade value has been dramatically shrinking so far for this year. That means the market share in terms of value for Chinese goods is expanding rapidly. Look at your India's case, you got 13% export down YtoY for Jan and Feb combined, that is 17.7 percentage points lower than China. However, u guys are still smart enough to generate beautiful "growth" data to become the "fastest economy growing" country in the world, the title India has been dreaming for a long time.

Read the reply. I have been replying and saying that foreign demand has been a smaller reason. Yes, demand has decreased in the EU, but US is still OK. I said that the 3 reasons that I listed were the most pertinent ones to slowing Chinese exports.

 

[zeronet]

Read the reply. I have been replying and saying that foreign demand has been a smaller reason. Yes, demand has decreased in the EU, but US is still OK. I said that the 3 reasons that I listed were the most pertinent ones to slowing Chinese exports.

Give you some data, to sense the dramatically shrinking global trade value, for 2015 Jan and Feb combined if not otherwise marked:

Export

USA: -4.6% (import: -3.3%)
Japan: -4.9%
Germany: -14.4%
India: -13%
Korea: -2.1%
Mexico: -2.2%
Russia: -25.4%
Turkey: -3.4%
Chile: -2.3%
Indonesia: -11.89%
Taiwan: -4.2% (1st quarter 2015)
China: +4.7% (1st quarter 2015)

 

[mike2000 is back]

No need to get personal with insults.... Its true that China having grown so big, its GDP growth will naturally 'slow down', but even this slow down means around 6-7% average growth a year which is MASSIVE for a country this size. This means they add more in dollars value than any country on earth even more than the U.S. the advantage China has is its massive/advanced supply chain, infrastructure, skilled/disciplined labour force,huge market, experienced managers running big factories etc something no other developing country has, its for this reason they still attract far more FDI than any developing country despite their high/increasing labour cost. In fact they just overtook the U.S as the worlds largest recipient of FDI(though its due to a large divestment in U.S) and Hong Kong is second, so if you combine both, the figure is crazy.
Thing is Chiba has the advantage of still being relatively poor/backward GDP per capital terms/productivity per head. If they were to match their east Asian peers like japan and south Korea achievements(which i believe they can with time) then even the U.S will be no match. Though remains to be seen if they can match them. So we always have to put things in perspective, both China and India have a huge room for growth. The potential is still there, saturation point hasn't even half reached yet.

 

[Edison Chen]

You know nothing about economics, it seems. Liquidity in domestic economy will be due to local currency. Rather, the situation is totally different with the PBOC trying to simulate the economy and injecting liquidity in the market where it is required, and trying to cool hot asset bubbles.

He is correct, too much trade surplus will increase the net foreign assets, and the foreign exchange reserves, and the funds outstanding for foreign exchange will increase, which will push PBOC to increase the currency supply. It is a passive but the main source of China's past currency supply. But China doesn't have these problems right now, because it's deflation.

 

[MarkovChain]

He is correct, too much trade surplus will increase the net foreign assets, and the foreign exchange reserves, and the funds outstanding for foreign exchange will increase, which will push PBOC to increase the currency supply. It is a passive but the main source of China's past currency supply. But China doesn't have these problems right now, because it's deflation.

China has done impressively in keeping domestic inflation low while also keeping it's currency undervalued which is quite counter intuitive. I read they managed it by making state run banks to lend to businesses at lower rates, is this true?

 

[Edison Chen]

I read they managed it by making state run banks to lend to businesses at lower rates, is this true?

It's true China has decreased RRR by 0.5% in Feb, 2015. Rural banks have another deduction of 0.5%. Shortly after 20 days, China again decreased the benchmark of lend and deposit interest by 0.25%. While in 2014, China has already lowered the interest rate by 0.4% and expanded the deposit interest rate floating range from 1.2 to 1.3. We heard that in Q2, there will be new RRR reduction policy.

Actually not only state owned banks, it's for all commercial banks.

 

[Bussard Ramjet]

He is correct, too much trade surplus will increase the net foreign assets, and the foreign exchange reserves, and the funds outstanding for foreign exchange will increase, which will push PBOC to increase the currency supply. It is a passive but the main source of China's past currency supply. But China doesn't have these problems right now, because it's deflation.

Right now your foreign reserves are decreasing owing to capital outflows.

 

[AndrewJin]

Give you some data, to sense the dramatically shrinking global trade value, for 2015 Jan and Feb combined if not otherwise marked:

Export

USA: -4.6% (import: -3.3%)
Japan: -4.9%
Germany: -14.4%
India: -13%
Korea: -2.1%
Mexico: -2.2%
Russia: -25.4%
Turkey: -3.4%
Chile: -2.3%
Indonesia: -11.89%
Taiwan: -4.2% (1st quarter 2015)
China: +4.7% (1st quarter 2015)

So in your list, China is only one not decreasing?

 

[Edison Chen]

Right now your foreign reserves are decreasing owing to capital outflows.

In fact, China is the last country likely to be affected by capital outflow after Russia, India and Brazil. China is opening new sectors to foreign capital to encourage innovative elements come to China, for example, they will invest in some high tech fields or medical programs. China is still the most ideal place for the capital, because Chinese government is capable of making consecutive policies, which means there won't be big unfavourable changes to foreign investments. And I‘m sure after the capital account opens free, there will be more foreign capitals.

China's foreign reserve is now like 3.8 trillion U.S. dollars. Many developed economies have less foreign reserves than foreign assets, they can't let the assets be there and depreciate. The foreign assets bring good returns to them. I'm glad that China's foreign reserve is slightly decreasing while our OFDI is increasing.

 

[Edison Chen]

It's true China has decreased RRR by 0.5% in Feb, 2015. Rural banks have another deduction of 0.5%. Shortly after 20 days, China again decreased the benchmark of lend and deposit interest by 0.25%. While in 2014, China has already lowered the interest rate by 0.4% and expanded the deposit interest rate floating range from 1.2 to 1.3. We heard that in Q2, there will be new RRR reduction policy.

Actually not only state owned banks, it's for all commercial banks.

Cut in reserves to accelerate economic growth - Business - Chinadaily.com.cn

China to reduce RRR by 1.0% tomorrow.

The People's Bank of China has cut the amount of cash banks must hold as reserves by one percent from Monday, in a move to speed up economic growth.

For rural credit cooperatives and banks in towns and villages, the rate of the savings deposit reserve fund will be lowered by a further one percentage point. Banks in towns and villages will enjoy the same rate as rural credit cooperatives, according to the central bank.

The Agriculture Development Bank of China will enjoy an additional two percentage point reduction.

State-owned banks and other shareholding commercial institutions that have lent a certain ratio of their money to small and micro-sized enterprises or people related to agriculture, rural areas and farmers will qualify for a cut of an additional 50 basis points in the reserve requirement ratio.

This is in a bid to further enhance financial institutions' capability to join in the nation's efforts to optimize its economic structure, help small and micro-sized enterprises, better deal with tasks related to agriculture, rural areas and farmers, and support key water conservancy projects,according to the central bank's statement.

 

[Beidou2020]

No need to get personal with insults.... Its true that China having grown so big, its GDP growth will naturally 'slow down', but even this slow down means around 6-7% average growth a year which is MASSIVE for a country this size. This means they add more in dollars value than any country on earth even more than the U.S. the advantage China has is its massive/advanced supply chain, infrastructure, skilled/disciplined labour force,huge market, experienced managers running big factories etc something no other developing country has, its for this reason they still attract far more FDI than any developing country despite their high/increasing labour cost. In fact they just overtook the U.S as the worlds largest recipient of FDI(though its due to a large divestment in U.S) and Hong Kong is second, so if you combine both, the figure is crazy.
Thing is Chiba has the advantage of still being relatively poor/backward GDP per capital terms/productivity per head. If they were to match their east Asian peers like japan and south Korea achievements(which i believe they can with time) then even the U.S will be no match. Though remains to be seen if they can match them. So we always have to put things in perspective, both China and India have a huge room for growth. The potential is still there, saturation point hasn't even half reached yet.

This is the only relevant post you have ever posted.

Well done mate.

 

[AndrewJin]

Cut in reserves to accelerate economic growth - Business - Chinadaily.com.cn

China to reduce RRR by 1.0% tomorrow.

The People's Bank of China has cut the amount of cash banks must hold as reserves by one percent from Monday, in a move to speed up economic growth.

For rural credit cooperatives and banks in towns and villages, the rate of the savings deposit reserve fund will be lowered by a further one percentage point. Banks in towns and villages will enjoy the same rate as rural credit cooperatives, according to the central bank.

The Agriculture Development Bank of China will enjoy an additional two percentage point reduction.

State-owned banks and other shareholding commercial institutions that have lent a certain ratio of their money to small and micro-sized enterprises or people related to agriculture, rural areas and farmers will qualify for a cut of an additional 50 basis points in the reserve requirement ratio.

This is in a bid to further enhance financial institutions' capability to join in the nation's efforts to optimize its economic structure, help small and micro-sized enterprises, better deal with tasks related to agriculture, rural areas and farmers, and support key water conservancy projects,according to the central bank's statement.

Off topic for a moment, I like your last avatar.

I found this small bank in a town of southern Anhui Province. Never have I realised there are so many small banks for agriculture and people in the countryside before.

 

[YAGlaser]

中国经济稍微有点波动，硬度人就高潮。

Please in English ,or the Indian guys won't get your words

 

[AndrewJin]

Please in English ,or the Indian guys won't get your words

They will feel hurt, better not.