Tuesday, January 10, 2012

China trade surplus declining sharply over past years

According to some theorists China exported its excess savings from its trade surplus and this drove down interest rates in the West. This also fueled over-consumption especially in the U.S.
  But the situation is changing. In 2010 the Chinese trade surplus was 183 billion (U.S. dollars) whereas this year it shrunk to 155 billion. While this is still a considerable amount. This surplus was just 2.1 per cent of Chinese GDP compared with the surplus in 2007 that set a record 7.3 per cent of GDP.
   An analyst in Beijing predicts a further drop to 1.2 per cent of GDP this year. A Hong Kong analyst claims that the surplus this year could be as low as 41 billion.
   China seems to be re-orienting investment to meet domestic needs and domestic demand. Much is being spent on infrastructure and building a service economy. This is investment that will be good for Chinese consumers. However, the debt crisis in Europe with its accompanying austerity measures will ensure that many European economies will grow little or even slip into recession. The United States as well faces cutbacks that may slow its growth even more. For much more analysis see this article.

No comments:

US will bank Tik Tok unless it sells off its US operations

  US Treasury Secretary Steven Mnuchin said during a CNBC interview that the Trump administration has decided that the Chinese internet app ...