Wednesday, 11 March 2009

The Chinese export bubble is over

I pulled this chart from Brad Setser's blog. As Brad puts it....

After soaring for most of this decade — the pace of China’s export growth clearly turned up in 2002 or 2003 and then stayed at a very high pace — China’s exports are falling back to earth. The surge in China’s exports could prove to be as unsustainable as the rise in US (and some European) home prices. They might end up being mirror images … as Americans and Europeans could only import so much from China so long as they could borrow against rising home prices.

6 comments:

Josh said...

WOW!!!!

Anonymous said...

That chart sets up lousy prospects for the world returning to growth any time soon.

Anonymous said...

I guess the 'clever' financial stuff produced three times the amount of credit that the Western economies could sustain long-term. So a bit further down to go and Chinese exports will reach a sustainable level.

I hope those factory workers will not starve back in their home villages in the interior.

B. in C.

Mark Wadsworth said...

The bubble which now interests me most is the one in UK and US government bonds. The former is pretty much at a peak and the US one burst at the turn of the year.

AntiCitizenOne said...

I always considered it a madness of the Chinese to go for export growth at the expense of developing their own internal economy.

I'm pretty sure I was right.

This credit bubble caused the worlds largest ever mis-allocation of investment.

wildgoose said...

China is a bit like a unicyclist - if they stop peddling they fall off.

They need to keep their economy growing at a fast clip because if it falters the rise in Civil Unrest could topple the regime - China doesn't have unemployment benefits for anyone, never mind scrotes with plasma TVs and Playstations.