Jake's View | Mainland China’s exports hold up but proceeds head offshore

China’s export sales unexpectedly rose for the first time in four months in June while imports fell again but posted their best performance this year, causing some optimism that tepid trade flows are picking up.

SCMP, July 14

It’s time to issue my trade seismograph warning again, I see. Month to month trade figures go up and down like a seismograph needle in an earthquake. If they cause optimism one month, they will cause pessimism the next.

But there are still some interesting trends to observe here. They are that the mainland is keeping up its export performance remarkably well for worldwide trade conditions but is not keeping the proceeds in the mainland.

First, however, my apologies for putting three lines in a single chart. I try not to do that sort of thing. It just confuses the eye. But I need to do it in this case to show the contrasts.

The chart shows you foreign trade in year-on-year growth rates. These are smoothed out with a six-month moving average to get over some of that seismograph effect.

Start with the green line. This represents the combined imports of the United States and Europe, together by far the largest market for Asian-made goods, but a rather cool one at the moment. What looked like an incipient recovery in the middle of last year has stalled.