|

China trade and global repercussions [Video]

China’s trade surplus hit new records

China

As with many other strong trade surplus scenarios, such as in Australia, a key contributing factor has actually been weakness on the import side. Growing just 2.3%.

Nevertheless, it was good to see exports surging 18% as an indication of ports and shipping getting back to normal. Further Covid lockdowns cannot be ruled out, but authorities appear to be taking a slightly more tolerant and accommodative role on this front.

That is the fine print so to speak however, as the big picture tectonic plate shift is to be found in the maturity of the Chinese domestic economy overall. The modest imports number shows widespread caution by consumers and businesses alike and we all know about the nation’s property troubles.

There are two distinct forces at work and they can tend to reinforce one another. These are a peak in the property sector having been seen about a year ago now, and a much more profound general coming of age of the economy in an historic context.

We have been forecasting for some time that China was now settling back into a more stable growth path. To expect growth rates more akin to the west in the region of 2% to 5% GDP.

Clearly, this is still a strong performance zone, but nothing of the kind of the previous two decades. This is not a short term aberration. Many thought the China slow-down was due entirely to Covid, and then to lockdowns. We should think of these events as masking what was already at play in the underlying economy. That is, the end of boom phase of a fifth of the world’s population playing catch up to the economies of the west.

China has established itself as the second largest economy in the world and is likely to continue to grow faster than the USA. Thereby, contributing more to global growth than any other economy. The permanent slowing of China, now in place, means a much lower forward trajectory for the global economy as well.

Repercussions of this seismic shift will continue to grow. Particularly for nations like Australia who depend on commodity exports to China for much of their own economic strength.

The whole world is in the grip of inflation, higher rates and a serious slowing of the major three economic zones of Europe, Asia and the USA.

Again, I have to highlight, the outlook for stock market prices is not great.

Author

Clifford Bennett

Clifford Bennett

Independent Analyst

With over 35 years of economic and market trading experience, Clifford Bennett (aka Big Call Bennett) is an internationally renowned predictor of the global financial markets, earning titles such as the “World’s most accurate curr

More from Clifford Bennett
Share:

Editor's Picks

AUD/USD eyes 100-SMA hurdle near 0.7035 as hawkish RBA counters firmer USD

AUD/USD regains positive traction on Tuesday and climbs to 0.7030 during the Asian session, reversing the previous day's corrective slide from a one-month high as hawkish RBA rate expectations continue to support the Aussie. Spot prices, however, remain below the 100-day SMA pivotal resistance amid a firmer US Dollar as traders brace for Australia’s September CPI report on Wednesday ahead of the Fed rate decision.

USD/JPY sticks to modest gains above 157.50 as traders await Fed, BoJ meetings

USD/JPY attracts buyers for the third straight day, recovering further from a one-month low ahead of Wednesday’s FOMC decision and the BoJ policy update on Friday. Meanwhile, expectations that the BoJ may hold off on aggressive rate hikes weigh on the Japanese Yen, and the US Dollar advances to a nearly two-week high, supporting the currency pair.

Gold holds above $4,000 as traders brace for Fed interest rate decision

Gold edges higher during American trading hours on Tuesday after trading in negative territory earlier in the day. A slight decline in Oil prices offers some relief, although a firmer USD limits the upside as traders await the Fed’s monetary policy announcement on Wednesday.

Crypto Today: Bitcoin, Ethereum and XRP on edge as sell-side pressure intensifies

Cryptocurrency prices are broadly correcting on Tuesday, led by Bitcoin (BTC) edging lower below the pivotal $80,000 level. Ethereum (ETH) mirrors Bitcoin’s neutral-to-bearish outlook, while Ripple (XRP) hovers around $1.30.

Experts agree: Fed policy outlook and geopolitical tensions keep US Dollar bid

The US Dollar Index rallies 0.6% in three days and hits fresh two-week highs above 102.00. Investors return to the US Dollar as markets brace for a hawkish hold by the Fed on Wednesday. Waning hopes of any immediate US-Iran peace deal have provided additional support to the safe-haven USD.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.