China’s Trade Surplus Hits New Record…
So even as the U.S. trade deficit narrows (to $64.3 Billion), China’s trade surplus soars ($23.83 Billion this month). What is going on? Either China is exporting more goods to the US (who is importing less goods than last month), or it is exporting to other markets.
It looks like US consumers are beginning to suffer, hence dampening demand for imported goods in general. Yet perhaps they are turning to the lowest price imports, mainly from China, at the expense of other countries. The Wall Street Journal noted today that:
For September, the deficit with China increased by 4.6% to a monthly record of $23 billion, reflecting a jump in Chinese imports to a record $27.6 billion. That gain reflected big increases in imports of Chinese televisions and VCRs, cellphones and toys and games as U.S. retailers stock up for Christmas season.
America is indeed importing more goods from China at the expense of other countries. From a separate article from today’s Wall Street Journal:
China’s trade surplus for October ballooned to a monthly record of $23.83 billion, far surpassing the previous record…
China’s shipments of merchandise overseas jumped 29.6% in October from a year earlier, only slightly slower than September’s 30.6% increase. That reflects not only strong demand in major markets like the U.S. and Europe, but also the expansion of China’s export base, as companies continue to build factories and diversify their product lines.
So it seems that US companies are moving more and more manufacturing to China (this should be obvious, right?), and maybe that they are choosing cheaper Chinese goods at the expense of imports from other countries. The price advantage must be significant, since the dollar is buying less and less yuan these days. This from the same article:
the U.S. dollar weakened to less than 7.87 yuan in intra day trading for the first time yesterday.
That definitely hurts expats in China like myself getting paid largely in US dollars, or importers and companies selling Chinese made goods.
What do you think? Is the increase in China’s trade surplus with the US more due to US companies moving more and more manufacturing to China or a bias towards importing cheaper goods from China, rather than other more expensive imports from other countries?
