Jake's View

Trade figures still move south despite lunar holiday anomaly

Mainland export figures rose 11.5pc, but that was based on seasonally low reading for March 2015

PUBLISHED : Sunday, 17 April, 2016, 1:04am
UPDATED : Sunday, 17 April, 2016, 1:13am

I confidently predict that the trade figures for March will see a surprising element of export strength. Anyone care to take the bet?

Yours truly,

SCMP, March 10

Mainland exports surprised the market by bouncing back to positive territory in March, growing 11.5 per cent from the same month a year earlier ...

SCMP, April 14


But no-one would take the bet. Why is it that whenever I have a dead sure one I can never make any money on it? I should take up horses. You can always get odds on horses.

Praise me anyway. I love flattery. Lay it on thick and heavy, please. I can see the future. For instance, I confidently predict that just after 6:45 pm this evening the sun will set. I also predict that it will do so in the west today. And given the weather forecast as I write this, no-one will see it happen.

To the hard facts. Do you see the regular sharp dips every year on the chart? Every year the mainland’s exports are routinely way down in February, not because it is a shorter month of the year but because of factory down time for the Lunar New Year holiday.

Occasionally, however, the holiday falls in late February and this affects shipments in March. It happened last year and March was consequently the month last year in which exports were way down.

This year, however, we were back to normal with February, as usual, showing a dip in the trade figures. Comparison with an unusually high February last year thus led our reporter last month to write, “China’s exports plunged more than 20 per cent in February, falling on a scale not seen since the 2009 financial crisis.”

No, I’m not kicking our reporter about it. I’ve done that sort of thing too often myself. But, obviously, the March trade figures were then going to look very good by comparison with an anomalously low March the previous year.

Now look more closely at the chart. The straight line across it represents the export figure for March this year, US$160.8 billion. I have also put a little dot over the export numbers for March in previous years.

What we now see is that, aside from that anomalous March last year, the mainland’s exports in March were the lowest they have been in five years. So what is all this about “surprised the market by bouncing back”? They haven’t bounced back. They are continuing a steady downtrend.

But before you take this as depressing news, let me point out that this is still better than the average of the rest of Asia. Export growth is down everywhere across the region. The mainland is still gaining market share on this measure.

Let me also point out that it is no reflection on the mainland’s export industries. Import demand is way down in Europe and America. If the buyer won’t buy then the seller can’t sell.

What I find depressing, however, is that these latest mainland trade figures have been taken by American television commentators, the sort of people who cover economic matters as they would a football game, to be indicators that investment sentiment has suddenly changed and the world has entered a bright new tomorrow.

Turn the d--- thing off, I say. Nothing has really changed. Bewildered academics who were mistakenly given top jobs in central banks across the world continue to destroy the price of money with their quantitative easing and this continues to turn financial markets into overpriced casinos.

You gotta believe me. I can see the future.