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Looking at current account surplus as a sign of strength miss a key pt here: China imports of merchandise contracted year-to-date & much more than the 0% ish growth of exports so the trade surplus is b/c of weak demand. China is using the current account as a 1st line of defence.
The implication is here is that:
a) Yes, tariffs hurt but the impact US tariffs is felt by the rest of the world through;
b) China REDUCING its IMPORTS from ROW to be more inwardly-driven;
c) China exports not rebounding - it is just importing less so arithmetic shows CA rising.
a) Yes, tariffs hurt but the impact US tariffs is felt by the rest of the world through;
b) China REDUCING its IMPORTS from ROW to be more inwardly-driven;
c) China exports not rebounding - it is just importing less so arithmetic shows CA rising.
If u look at imports of China + investment & by that I mean private sector investment then u will see that:
a) Imports contracting a lot;
b) Investing slowing & mostly by POEs & by sector manufacturing by a lot;
c) The gov’ is helping to put a floor to growth not a V-shaped recov
a) Imports contracting a lot;
b) Investing slowing & mostly by POEs & by sector manufacturing by a lot;
c) The gov’ is helping to put a floor to growth not a V-shaped recov
So if there is capital outflow (EPFR & other indicate there is), then the current account, esp via massive reduction of imports, is its first line of defence.
Meaning, if u depend on China for demand (e.g., Korea), then the CA surplus is very bad news b/c it’s from 📉of imports
Meaning, if u depend on China for demand (e.g., Korea), then the CA surplus is very bad news b/c it’s from 📉of imports
