logo
  Join        Login             Stock Quote

The Declining Trend Of China's Trade Surplus Continues

 March 13, 2011 09:50 PM


Executive Summary

China's $7.3bn trade deficit for February has more than simply a monthly significance. The crucial fact is that it is part of a sustained decline of China's trade surplus - the details of which are outlined below.

This trend is not only objectively important for the world economy but also refutes analyses that China is pursuing a ‘mercantilist' course aimed to secure a large trade surplus. The latest figures should therefore be examined against longer term trends.

As a considerable international debate has taken place on the direction of China's trade surplus, this trend clearly confirms the analyses of those, such as this blog, which have pointed to China's declining surplus, with its economic expansion being driven by strong expansion of domestic demand.

[Related -Pfizer Inc. (PFE) Q2 Earnings Preview: A Penny Here a Penny There]

China's declining trade surplus

Evidently no great significance should be attached to a single month's figure for a country's trade balance – particularly when it coincides with the largest public holiday of the year, as with China's Lunar New Year (Spring) festival. China ran a trade deficit in February but it will run an overall surplus this year. What is significant is the declining trend of this surplus.

[Related -AbbVie Inc. (ABBV): Headed $67’s Way – Maybe More]

The simplest adjustment that can be made to see the trend, and to avoid the distortions of a single month's data, one which most analysts have carried out, is to combine the January and February 2011 figures. The reason for this adjustment is that China's Lunar New Year Festival falls some years in February and some in January, so simply an annual month by month comparison results in a seasonal statistical distortion. China ran a $6.4bn surplus in January 2011, and taken with February's result, the combined figure for the two months is a deficit of $0.9bn. As China's trade surplus is usually higher in the second half of the year than the first, this should not be taken to suggest China will run an overall deficit in 2011.

What was significant, however, was the clearly and sharply declining figure for China's combined trade balance in January and February this year compared to previous ones.


Next Page >>123
iOnTheMarket Premium
Advertisement

Advertisement


Comments Closed


rss feed

Latest Stories

article imageFord Motor Company (F) Q2 Earnings Preview: Light on the Top Line?

Ford Motor Company (NYSE:F) will release its preliminary second quarter 2014 results at 6:30 a.m. EDT read on...

article imageTripadvisor Inc. (TRIP) Q2 Earnings Preview: On Target Enough?

Tripadvisor Inc. (NASDAQ:TRIP) will release its second quarter financial results after market close on read on...

article imageFacebook Inc. (FB) Q2 Earnings Preview: Scoring Big on the World Cup

Facebook Inc. (NASDAQ:FB) will post its second-quarter 2014 financial results after the market close on read on...

article imageThe Boeing Company (BA) Q2 Earnings Preview: Durable Earnings Beater

The Boeing Company (NYSE:BA) will publish its second-quarter financial results before the open of the read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.