The Customs Administration in China on Tuesday said the country’s exports were down 14.5% YoY in July while imports were down 12.4%. The export drop was the biggest since Feb 2020. Shipments to the US plummeted 23.1% in July, according to the customs data. Exports to other markets including Japan, South Korea, Taiwan, Asean, the EU, Brazil and Australia all dropped by double digit percentages, too.
The deepened slump in imports “is a reflection of weak domestic demand,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management Ltd according to a Bloomberg report. The drop was the worst since January. “The overall consumption and investment growth probably both stayed quite weak in China.” The China economy appears to be in shambles with deflation, troubled real estate market and now weak imports/exports.
I am shocked that the imports from China to the USA tanked so much in July. Supposedly, the USA is having a soft landing with no recession but the trade number seems to indicate otherwise. Namely, the sharp decline in trade indicates the projected demand of Chinese goods is really weak, which only happens during a recession, right?!? The July inflation report will come out on Thursday and we will see more data points there. If the goods price index is down significantly, it indicates that people are really cutting back spending on goods aka stuff we don’t really need but buy for fun. The US economy will be in trouble when that happens.
The other Chinese builders we track are still trending down. The housing market seems super loose. Way over built? Quite different then in G8 where it's so tight it's driving inflation.
Going to be interesting to see how the economy turns around with by far largest asset owned by households continuing to trend down.
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