Bad News From China

So much for all of the talk about China leading the world out of the doldrums. The news out of the country is that exports — think the pillar of their economy — aren’t growing. Let me rephrase that. They’re shrinking.

From the WSJ:

Chinese exports in April fell 22.6% from a year earlier, and imports fell 23.0%, the General Administration of Customs said Tuesday.

The decline in exports in April was sharper than March’s 17.1% drop and the median forecast of an 18.4% decline in a Dow Jones Newswires survey of 16 economists. The decline in imports was narrower than March’s 25.1% plunge, but wider than the poll’s median forecast of a 22.0% drop.

China’s trade surplus narrowed to US$13.14 billion in April from US$18.56 billion in March.

Fan Jianping, a senior economist at a government-linked think tank, the State Information Center, said Tuesday export demand doesn’t show “any signs of turning better.” He added that any export improvement may yet reverse course later.

Warning that government policies alone won’t be able to support an economic recovery, he said at a metals conference that “market demand has to do the job.”

Lots of pundits for reasons that appeared to beĀ unfathomableĀ to me had been beating the drum for the past few weeks about China’s stimulus plan and an incipient recovery in the economy. I didn’t see it and still don’t. The bottom line is that China isn’t going to lead anyone anywhere. Absent a pickup in demand from the West, the country like may others is going to limp along.

There seems to me an ominous note to this report. Green shoots notwithstanding, the absence, rather I should say the deterioration of the Chinese export sector does not argue in favor of any near term recovery. If there is no demand for Chinese goods there is little improvement in aggregate demand world wide.

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