April 12, 2010
-- by Dave Johnson
"China posted a $7.24-billion trade deficit in March, its first in almost six years"
The world is shocked by the announcement!
Last month I wrote that China was expected to report a trade deficit right about now, just before the Obama administration was scheduled to make a declaration on whether China is manipulating its currency or not, China's Coming Surprise Announcement And My Bridge On EBay,
On April 15 the Obama administration is required to officially declare whether China is manipulating its currency. SInce China is manipulating its currency there is a great deal of pressure on the administration to say so.
Surprise! On April 12 China is now said to be preparing to announce a trade deficit.
[. . .] Oh, by the way, I wanted to let everyone know that I will be selling a bridge on eBay, and invite you to bid. It's just coincidentally going to be auctioned just before the Chinese announcement.
And here we are, with the surprise announcement, and the statement that it means China doesn't need to adjust its currency, exactly as the administration takes the currency manipulation case to the G-20. China Says Trade Data Justify Its Yuan Policy
China ran its first monthly trade deficit in six years in March, data issued Saturday show, a development that, while likely temporary, was quickly seized on by the nation's commerce ministry to argue against the need to revalue the country's currency.
With imports of commodities surging last month, China swung to a trade deficit of $7.24 billion in March from a surplus of $7.61 billion in February, according to figures issued by China's Customs agency. Overall, imports were up 66% from a year earlier in March, with purchases of crude oil and copper at near-record levels in volume terms.
Note that the deficit comes after "[v]irtually all Chinese export factories closed for the last two weeks of February in observance of the Lunar New Year, which was unusually late this year" and is also because China's imports of raw materials surged. Raw materials. See if you can guess what a surge in imports of raw materials to a manufacturing engine means is about to happen? (Hint: it means a surge in manufactured goods is about to hit us.)
Of course, the Obama administration has put off their declaration. And China has hinted that they will increase the value of their currency a bit, so that their current pricing advantage of up to 40% will, in a year, be maybe ... 42%.
So things will get worse more slowly, just like the jobs situation. I guess everything is OK now.
Posted by Dave Johnson at April 12, 2010 11:38 AM
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