The China trade figures for June are out, and they show a trade
surplus of $31.7 billion. Exports grew by 11.3% over the past year
while imports increased by 6.2%.
[caption id="attachment_57487" align="alignright" width="300"
caption="China trade figures show exports are going strong."]
These figures are being viewed as signs of falling growth in
China. The People's Republic is the biggest importer of many
commodities globally, ranging from copper to iron ore. If demand
from China trade continues to fall, it will be very difficult for
countries such as Brazil to recover.
says "the world's second largest economy faces strong
headwinds", but there are more positive ways to look at the new
data. First, it is reassuring that China trade in importing and
exporting is posting surpluses. Much of the surplus could be
as a result of the falling price of commodities
. Oil (
), copper (
) and iron ore (
) are all well below 52-week highs.
It is also salutory that Chinese trade in international commerce
is adding to its foreign reserves. China is the second largest
economy in the world behind the United States. That China is still
making money each month by exporting more than it imports is a good
sign; the global economy will not rebound if the U.S. and People's
Republic are not strong.
Although not an ideal situation, the world's economy needs China
trade to be strong in its role as a global hard currency reserve.
China saves the most of any nation and has the largest foreign
exchange reserves of $3 trillion. The June surplus will add to
that. While it is certainly preferable for the U.S. and other
nations not to have massive budget deficits, that will not
change for some time. In the meantime China provides financial
capital to the rest of the world through direct investments, buying
companies, or portfolio investment, buying stocks and bonds.
This will also increase the value of the Chinese
renminbi and its acceptance. The stronger the
currency becomes for China, the better. This will lead to
China trade having smaller future surpluses, and without
an undervalued currency will further integrate China into the
global community as a more responsible actor.
The June figures show the Chinese economy is still a strong
exporter. There are many reasons for the falling imports, not all
of them bad. Most importantly, China continues to function in its
capacity as the second most powerful economy in the world.