Very quickly – since the German constitutional court awaits this morning:
China’s trade surplus jumped 43pc to almost $32bn in June. Imports for domestic consumption fell sharply.
This is exactly the sort of development that I alluded to in yesterday’s blog, subject to all the usual health-warnings about a single month’s data.
It implies that China is no longer consuming enough of its own output. It is exporting excess manufacturing and industrial capacity – with an undervalued currency – into a world that is already grappling with a deep secular slump.
(China is not the worst or only offender in this respect. Germany’s current account surplus under the fixed D-Mark racket – the euro – is far higher as a share of GDP. But China is the world’s second largest economy, so it matters.)
It transmits a fresh deflationary impulse to a world already dangerously close to deflation. This is a greatly under-estimated risk.
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See Also:
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All French Must Help Reduce National Debt – Hollande
Denise Rich gives up U.S. citizenship, will save millions in U.S. taxes, report says
Ho Hum, More Demands for Global Taxes from the United Nations
Afternoon Updates:
12:04 pm EDT, July 11th, 2012 — Court May Take Longer to Rule on Euro Measures
12:05 pm EDT, July 11th, 2012 — Democracy Loses as Romania Spins out of Control
12:06 pm EDT, July 11th, 2012 — The Big Liebor
12:07 pm EDT, July 11th, 2012 — Monti: Italy bailout can’t be ruled out
12:08 pm EDT, July 11th, 2012 — Germany’s top court warned not to delay euro bailout fund
12:10 pm EDT, July 11th, 2012 — Silvio Berlusconi ready to run for Italy prime minister again
