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Posts Tagged ‘China’

While the Australian economy is doing better than most at the moment, it still has its problems — while unemployment is low, a large number of people were forced into part time work during the short recession, and has its concerns — economic growth is too heavily dependent on China.

Interesting coverage of a tour of Australia by a former member of the China Central Bank Committee can be found here:

http://www.theaustralian.com.au/fears-prompt-an-rba-rates-rethink/story-e6frg8zx-1225804353146

On a related note an interesting article “China has now become the biggest risk to the world economy” from the UK:

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6575883/China-has-now-become-the-biggest-risk-to-the-world-economy.html

Some valid points/concerns in both articles. I’ve never understood why we have a World Trade Organization that acts as a global policeman/adjudicator, why tariffs and subsidies are generally banned, why dumping of goods is banned, yet currency manipulation by countries is allowed. It doesn’t make sense … to me anyway.

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An interesting article over on SeekingAlpha recently “Baltic Dry Index’s fall misleads investors.” The author pointed out that while the BDI is down, there is also a surplus of ships, so that the BDI weakness is not entirely due to lower levels of trade. Among the discussions that followed was a comment/question about the seasonality of imports and exports. I collected data from the Port of Los Angeles and trade the Census Bureau. The chart below shows US exports of goods (not services) plotted against port activity at Los Angeles. Not surprisingly a good correlation but I’m not sure if you can glean any seasonal trends from the data (and the data pre-2000 is much the same).

US goods exported and outward container TEUs

US goods exported and outward container TEUs

The import data correlation is not quite as good as the export data but it is tempting to conclude that some sort of seasonal pattern exists with import lows earlier in the year. Incidentally for a very clear example of a seasonal trade pattern have a look at imports from China.

US goods imported and inward container TEUs

US goods imported and inward container TEUs

So part of the rebound in import activity could be viewed as a seasonal pattern. We can assume that the decline in imports reflects the fall in consumer demand and/or a fall in anticipated consumer demand by importers.

Pretty much every metric you can find collapsed (overshot?) early in 09. The data shows an increase in containers being moved since the numbers collapsed, and an increase in trade in (declining) dollar terms, but also shows that we are some ways off from a true recovery.

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We hear a lot about the BRIC countries. The plot below — world crude steel production this decade as of end of August — pretty much sums up why it is all about China, the “C” in BRIC, when it comes to iron ore and metallurgical coal demand. The plot shows the enormous growth in Chinese steel production this decade, compared to the low growth in the other three BRIC group and the rest of the world.

world crude steel production

world crude steel production

Iron ore producers took a hit in pricing negotiations this year–admittedly from high price levels in 2008. The pick up in Chinese steel production this year is good news for iron and coal producers for 2010 pricing if this recovery in Chinese steel production is sustainable.

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