China exports just fell of a cliff,
Read more: http://www.businessinsider.com/r-chinas-march-exports-down-146-percent-year-on-year-as-measured-in-yuan-2015-4#ixzz3XJPlBBkdChina, the world's second largest economy, is in trouble.
Today, China revealed that exports, as calculated in yuan, fell by a massive 14.6% in March from a year ago.
To get an idea of just how big this contraction is, analysts predicted a RISE in exports for last month, not a double digit slump.
A survey by Bloomberg showed that analysts forecasted a median estimate for an 8.2% rise for China's March exports.
China even bucked its own trend today by reporting its trade figures in yuan. It usually reports trade figures in US dollars but, this time, it said that the data was not yet available. There was no explanation of why China did that.
Reuters' analysts expected exports, as measured in US dollars, to rise 12% in March on a yearly basis.
However, numbers coming out of China are often volatile on a month to month basis.
In a sign of soft domestic demand, the General Administration of Customs reported that yuan-denominated imports into China last month fell 12.3% from a year ago. The performance left China with a trade surplus of 18.2 billion yuan ($2.93 billion) last month, according to the yuan figures released on Monday.
The forecast was for a 11.7% drop in dollar-denominated imports, leaving China with a $45.4 billion surplus.
In line with the slowing Chinese economy, China's trade sector was buffeted by lacklustre foreign and domestic demand in the past year, raising concerns among policymakers.
The China slowdown
China is aiming for 7% GDP growth, which would be the slowest in nearly a quarter of a century. According to Oxford Analytics, even that number may be too optimistic.
"The weaker Chinese numbers are certainly not consistent with 'around 7%' output growth in the medium term,'" said the research group in a report. "Rather, the weaker M2 (money supply) growth, if sustained, supports our forecast of Chinese medium-term growth slowing to around 5.5% or possibly even lower. It is difficult to see how this would happen without the Chinese monetary authorities attempting to turn the trend by easing monetary policy."
Today, the World Bank cut its economic growth forecasts for East Asia and China after warning of "significant" risks from global uncertainties. It said China's economy is likely to slow to 7.1% in 2015 and 7.0% in 2016.
The world is not used to a macroeconomic environment in which China slows down. China's GDP growth has been robust since the late 1970s. In recent years, China's economy was on the verge of overtaking the US economy, and the world has essentially been dragged along behind Chinese growth for more than two decades. This chart shows historic GDP growth:
Google public data
Note that China growth has trended down over the last 10 years.
The Australian dollar — which is sensitive to the Chinese economy — fell to a six-year low on the news, The Telegraph reported:
A significant brake on Chinese growth could now "ripple out across the globe," said Michael Hewson of CMC Markets. "These data misses raise concerns that not only is the Chinese economy failing to rebalance with demand remaining low, but also the global economy’s demand for Chinese exports is also falling back raising concerns about the state of the global recovery as well," said Mr Hewson.
Slower growth will make it more difficult for China to handle its growing debt mountain. China's debts as a proportion of GDP climbed to 245% in 2014 from 144% in 2007.
Debt was actually falling as a portion of GDP for the few years running up to the financial crisis before rapidly picking up afterward.
Read more: http://www.businessinsider.com/r-chinas-march-exports-down-146-percent-year-on-year-as-measured-in-yuan-2015-4#ixzz3XJPYhiK7
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