Inflation Or Deflation, China Or US Goods?

For the month of May 2021, China’s General Administration of Customs believes the total US$ value of exports exiting that country was an impressive-sounding $263.9 billion. Compared to the US$ value of exports sent abroad in May 2020, this was a 27.9% increase. But base effects; exports in May 2020 had been a little more than 3% below those in May 2019. The 2-year change, therefore, a less inspired 11.1% compounded.

This suggests China’s vast export sector has been bumped up no more than it had been a few years ago during the insufficient top of Reflation #3. And that’s with everything being thrown into this global goods rebound largely emanating from the US; from rare earths to PPE stuff, a lot of one-offs have been included just to get to that $263.9 billion.

Furthermore, those same had stacked up much higher all the way back in December 2020. The GAC doesn’t seasonally adjust its figures, yet there’s still a recognizable seasonal pattern in them. The jump in last December’s export levels still represents the most recent peak. In other words, five months into 2021 the latest data continues to indicate how that may have been the best it gets for the rebound.

What if it really is downhill from here?

Before thinking about that, there’s still China’s import side to consider. Over here, the annual number is even more impressive, nearly twice the growth shown in exports. Rising 51.1% year-over-year last month, like all the rest of Chinese estimates (ex exports) these are huge numbers which otherwise appear to indicate a robust, intentionally government-fueled economic recovery consistent with what’s said to be behind 1970s-style inflation numbers at least in the United States.

The 2-year change in imports, though, this was only 12.4% (compounded) which doesn’t even come up to the better levels of Reflation #3. Even all that’s supposedly going right in and around China via global trade and the mainstream view of its internal policy contributions, the best they’ve managed (so far) from the inside is importantly less than what wasn’t nearly enough for the global economy heading toward 2019’s more synchronized global downturn (and eventual recession).

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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