IS CHINA NOW taking so much export market share as to cut its Asian neighbours out of foreign markets or do we have indications that export growth is slowing down across Asia?
The chart should make the question obvious. I have put the figures on a six-month average basis to knock out month to month volatility and they show that while the mainland still maintains export growth at more than 30 per cent year over year, other Asian countries have seen their export growth decline quite sharply in recent months.
The first scenario says that the big export powerhouse of Asia is pushing its regional neighbours aside. The mainland's share of Asian exports has doubled over the past six years to 31 per cent of the total and now exceeds even Japan's share by a considerable margin.
It says that others are simply finding it harder and harder to compete in any field into which the mainland's producers have put their energies as the economies of scale and the export pricing that the mainland has achieved are now becoming unbeatable. The leadership in Beijing may talk of responsibility towards China's neighbours but where money is concerned it is all muscle and no real sympathy.
The second scenario, however, says it may not be quite so. This way of looking at things suggests that the mainland's exporters have increasingly seen their margins pinched and their response, particularly among state-owned corporations, has been to defy the trend and push ever harder to get more exports out the door in order to get US dollar cash flow in through it, regardless of whether these exports are profitable.
The evidence for it is that the mainland's import growth is dropping rapidly even while export growth remains strong. It suggests that producers are fast clearing out their inventories. If so, their export growth is likely to drop soon as well and we will have clear evidence of an export slowdown across the entire region.
It is a somewhat tenuous analysis, I grant you, but it is unusual to see any one country in Asia defy the trend of the others in trade growth for very long. Historically, they all see their fortunes in trade go up and down at the same time.
And if the slowdown proves to be a general one, then there is not likely to be much that mainland producers can do to defy the trend for long. Given the enormous amount of economic effort that has been put into capital investment over the past few years (more than 50 per cent of gross domestic product at present), the threat of a margin pinch could prove to be a considerable one if export growth goes down.
The table shows the relative standings across Asia and it is immediately noteworthy here that the mainland's edge over Japan in total exports is likely to grow further yet with the low growth rate Japan shows. That 9.9 per cent in April fell further to 7 per cent last month.
The big surprise is Indonesia, which, although a relatively small exporter, has managed to maintain a high export growth and to have done it through merchandise rather than oil and gas exports.
And, of course, it is also noteworthy that Hong Kong is the only economy to have gone back into an export decline, in this case because only domestic exports are measured here and domestic garments exports have fallen steeply with the end of the international textiles quota system.
But it is entirely a peripheral matter. The big question is whether the mainland can keep its exports growing at the rate of the past four years when trade growth elsewhere in Asia is now in a downward trend and the next few months should provide an answer to that question. It may have a considerable bearing on the talk of revaluation of the yuan and on the mainland's overall economic fortunes.