If the global trading system is still being buffeted by problems, delays of whatever in supply chain logistics (as it undoubtedly is), how then have China and the US just revealed all time monthly highs for exports and imports?
It’s undeniable that Covid and its variants have rattled the global economy and trade in 2020 and 2021, helped by shortages of key components such as computer chips, shortages of containers, shipping pallets, staff, trucks, rail capacity and high (extraordinarily so) demand for goods of all types.
And yet the data from China’s November trade data and America’s trade report for October shows few signs of disruption.
In fact both reports were good news for global trade heading into 2022 with the threat from Covid Omicron still unclear but perhaps not the threat it seemed a week ago.
But the trade performance doesn’t reflect what is happening inside the respective borders. The Chinese economy is running roughly, a couple of cylinders are out of tune, the government has started trying to settle a looming property crisis without too much damage to the wider financial system or economy, and business is struggling with very high costs (producer prices still well over 12% annual, according to November’s data, released on Thursday).
On contrast, the US economy is booming – retail sales are strong, the labour market is solid to very buoyant, industrial production also solid and the impact of the shortage of computer chips on the US car industry is fading.
Inflation is the big worry on both economies, but the latest data confirm that the American economy is surging.
On Thursday the weekly report on US first time jobless claims revealed the lowest figure since 1969. The US trade performance in October reflected that boom.
Millions of jobs remain vacant, millions of people are resiging but not moving to new jobs. The pandemic has ignited unprecedented volatility in the huge US labour market which won’t settle for months to come.
November inflation data though showed the biggest concern and will be tackled at the Fed’s kast meeting for 2021 and its policy moves in 2022.
October saw US exports soar to a record high, as did imports – a sign the American economy is much fitter than some indicators, such as job numbers, might indicate.
The report from the US Commerce Department shows US exporters – especially in services, are performing very well.
Exports rose 8.1% to an all-time high of $US223.6 billion. Goods exports (planes, cars, machinery etc) rose 11.1% to $US158.7 billion, also a record high.
The US exported more services, which rose $US1.0 billion to $US64.9 billion as overseas travel rose as lockdowns were eased; other business services and charges for the use of intellectual property.
The deficit with China fell $US3.2 billion to $US28.3 billion in October. Exports increased $US2.8 billion to $US13.8 billion (higher shipments of soybeans) and imports decreased $US400 million to $US42.2 billion.
The deficit with the European Union fell $US2.1 billion to $US16.6 billion in October. Exports increased $US1.6 billion to $US24.9 billion and imports fell $500 million to $US41.5 billion.
Imports rose a more sedate 0.9% to a record $US290.7 billion. Goods imports were up 0.7% to an all-time high of $US242.7 billion thanks to higher shipments of motor vehicles, parts and engines.
There were also gains in imports of consumer goods, including cell phones and other household goods.
Imports of industrial supplies and materials fell as did imports of capital goods, pulled down by falls in semiconductors and civilian aircraft. There is a global chip shortage. Imports of services rose $US700 million to $US48.1 billion in October
This saw the trade deficit slump 17.6% to a six-month low of $US67.1 billion, the biggest percentage drop since April 2015.
For China a very different story even though the trade data was unambiguously solid.
The reserve ratio cut this week for banks, the property bust coming to a head, lower GDP growth estimates than this year and power supply concerns and an unpredictable central government which remains belligerent and brusque, makes 2022 a very tough year for outsiders to forecast for the Chinese economy.
But the property crisis is coming to a head (see separate story) and that will dominate headlines as companies large and small fail, are taken over, restructured – all with the central government trying to keep out of the mess it helped create and allowing provincial and local governments to do the dirty work and clean up. Those deemed responsible for the mess in the property companies face a very uncertain future and no doubt there will be stories of huge jail sentences and worse.
But the November trade report again confirmed that the country’s external account so far has remained immune to these pressures and the continuing pinpricks of Covid outbreaks.
Chinese exports rose 22% year on year In November to a record $US325.5 billion – a bit slower than previous months, but still very strong.
Imports though took off, jumping 31.7% to $US253.81 billion as shipments of copper rose for a third month in a row, iron ore imports bounced back above 100 million tonnes, oil imports rose sharply and coal imports hit their highest level in 2021 thanks to the continuing pressures on power supplies from a shortfall in coal supplies.
That saw China post a trade surplus of $US71.72 billion last month, compared with the poll’s forecast for a $US82.75 billion surplus and October’s $US84.54 billion.
In the 11 months to November China’s 2021 total imports and exports rose 22% to $US5.55 trillion. That was more than the figure for all of 2020 with a month to go.
For the first eleven months of the year, the trade surplus widened to $US581.71 billion from $US448.17 billion in the same period of 2020.
Retail sales, property, investment and production are all weak – not in recession, but certainly nowhere near as buoyant as we are seeing in the US.
