Well, if you were wondering when the “front-loading” effect was going to wear off for China’s previously resilient export machine, the answer is apparently “last month”.
As you may or may not have heard by now, China released trade data for November late Friday evening and while you can blame some of this on base effects, the numbers were less than inspiring.
CHINA NOV. EXPORTS RISE 5.4% Y/Y IN DOLLAR TERMS; EST. 9.4%
CHINA NOV. IMPORTS RISE 3.0% Y/Y IN DOLLAR TERMS; EST. 14.0%
— Walter White (@heisenbergrpt) December 8, 2018
I was going to leave it at that, but it’s a rainy and all-around dreary day here on the island where I make my home, so I guess I’ll begrudgingly join in on the bad news proliferation bandwagon and bring you the charts. Here’s the deceleration in exports and imports:
Again, there’s a base effect in there, but that’s not the only problem. As Goldman notes, “in sequential terms, exports contracted 2.8% mom sa non-annualized and imports declined 6.1% mom sa non-annualized, both reversing increases in October.”
Speaking in general terms, this isn’t great news to the extent it appears to validate both concerns about global growth (which would hit exports) and worries about domestic demand (which would presumably show up in imports).
Meanwhile, Trump’s favorite measure of “winning” on trade continues to show the U.S. “losing” – and record “losing” at that. China’s surplus with the U.S. was a record $35.6 billion last month.
That comes courtesy of what, at least on a quick check, looks like one of the largest YoY plunges in imports from America in the last half decade. Specifically, China’s imports from the U.S. dove 25% last month thanks to Trump’s trade war.
So, just to be clear, not only has Trump’s ill-conceived trade war dented the prospects for global growth, thereby jeopardizing the outlook for China’s critical export machine, it’s also led directly to a plunge in imports of U.S. goods, presumably to the detriment of the people and companies in the U.S. who make/produce those goods. And all in the interest of reducing the trade deficit (which isn’t important in the first place because trade deficits don’t mean what Trump thinks they mean) which is now going in the “wrong” direction on its way to an all-time record high.
Does this feel like “winning” to you?
Finally, I regret to inform you (really, I do) that according to a Bloomberg measure that tracks unsold auto inventory in China, the country is morphing into a giant parking lot. Simply put: Inventory levels are at all-time highs.
That’s all I’ve got for you on this and unfortunately, I fear that’s all you need.