Japan Exports Plunge, China Trade Surplus Disappears

"Every sentence I utter must be understood not as an affirmation, but as a question." - Niels Bohr

The U.S., for its part, is an importer not a manufacturer.


Japan's exports tumbled 36 percent in August -- with car shipments falling by half -- and imports also contracted sharply, the government said Thursday, showing the world's No. 2 economy remains mired in a deep slump.

Declines in automobile and steel exports were especially pronounced, the Ministry of Finance said. Exports fell for the 11th straight month to 4.5 trillion yen ($49 billion).

"We are not seeing an improvement in exports due to a continued slump in global demand," said Hiroshi Watanabe, an economist at Daiwa Institute of Research. "Japan's exports were particularly hit hard by stagnant demand in Asia and China."

Imports, meanwhile, dropped 41.3 percent from a year earlier to 4.3 trillion yen, reflecting weak consumption within Japan, where the jobless rate is at a record high as companies shed workers. Consumer finance company Aiful Corp. said Thursday it will cut 2,000 jobs, or about 44 percent of its work force.



This is not the stuff of expansions.

And the hits keep coming...

China's prodigious trade surplus appears to be coming to an end, and with it China's ability to fund the U.S. trade deficit.

But as import growth continues to outpace the nation's export growth after bottoming out earlier this year, the world's largest foreign-exchange accumulator is now on a path to start reporting trade deficits soon, according to Eric Fishwick, head of CLSA Asia-Pacific Markets' head of economic research.

"China will be recording, at the current run rate of exports and import growth, monthly trade deficits early next year or the turn of the year," Fishwick said Monday at the CLSA Investors' Forum 2009. "What is remarkable about its composition of imports is not just the pace, but the breadth. Nearly everything is going up at more or less the same sort of rate."

Official data released earlier this month showed that China's exports slumped a larger-than-expected 23.4% in August from the same period a year earlier, while imports narrowed by a margin of 17%

This explains the Treasury's Tic Data (hat tip to the Mad Scientist) which clearly shows China's lack of appetite for U.S. Treasuries of late. After all, if China does not have the DOLLARS that would naturally accumulate from a TRADE SURPLUS how can they buy U.S. Treasuries? They can't.

"He who would be serene and pure needs but one thing, detachment." - Meister Eckhart

Back soon,


Greg