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Nope, Still No Flood of Chinese Goods

China continues to post record trade surpluses ... and once again the news flow is all about a flood of mainland exporters "rushing" to ship goods abroad in advance of US tariffs. The reality, however, is that Chinese exports are broadly flat and just in line with the rest of EM.

Rather, it's about weak imports. As before, the true explanation behind high trade surpluses is a big Chinese "import crunch", as mainland import spending has fallen well below the EM-wide trend in recent years. And the gap is widening all through 2024.

Finally, there's an inherent tension between the US view and the Chinese view of the problem. The US focuses on the merchandise goods balance, which is an embarrassingly high US$1 trillion per annum - but the "basic" BOP balance is much lower, less than US$300 billion, and this is the figure that matters for Chinese macro policy.

The bottom line is that China will continue to restrict imports and other outward spending by all means possible ... and the US will continue to rage at the resulting unabated trade imbalances. 

Nope, Still No Flood of Chinese Goods (Webcast)

Nope, Still No Flood of Chinese Goods (PDF)

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