Jake's View | Foreign trade is not the big weakness in China's economy
The simple fact of the matter is that China's foreign trade is still doing quite well for the overall market circumstances with which it must contend.
An unexpected 3.1 per cent fall in June exports from a year earlier ... and a 0.7 per cent fall in imports left in tatters official forecasts of an 8 per cent growth in total trade this year and prompted economists to revise their overall economic growth calls.
Hang on a moment. I'm not sure I buy all of this just yet. There is a bit more in this picture and the biggest weakness in China's economy is not foreign trade.
First of all, pardon the way that the bit more in my first chart confuses the eye. I generally take the view that three lines in one chart is too much but I need all three this time. They represent year-on-year growth rates of trade and I have put them on a six-month average basis to smooth them out. Not to smooth them would have the chart looking like a seismograph record in an earthquake.
We start with the blue line. This represents the growth of United States and European imports combined and clearly indicates an overall foreign trade slowdown. It's the basis of the story as foreign trade is primarily driven by the importer's willingness to buy rather than the exporter's willingness to sell.
What immediately stands out about this line on the chart is that it differs very little in trend from the red line representing the export growth record of Asia, excluding China. This is hardly surprising. When the importer imports the exporter exports.