Everyone knows that if America sneezes, the whole world catches cold. The days when the US is the world’s only economic Typhoid Mary may soon be numbered, however. As China rises to superpower status, the health of its businesses becomes a matter of concern for everyone.
It is alarming to see, then, that the nation’s exports fell 15% in dollar terms in March from the same period last year. Imports also fell by 12.7%, leaving a monthly surplus of $2.9bn (£2bn) – twenty times less than it was one month earlier ($60.6bn).
So is now the time to start hoarding gold and tins of baked beans while infection spreads throughout the global economy? Not so fast. Chinese monthly data are notoriously fickle. Look at its February figures. Imports fell that month by 22.6% from January, while exports surged 48% on the previous February. Wild oscillations are the order of the day.
This time of year is particularly volatile, as China’s lunar New Year can fall any time between late January and late Febuary. The celebrations – which can last for up to two weeks – disrupt economic activity in the country, while also producing a spending surge both at home and abroad.
It’s best to take these months all together. Total imports and exports were 20% higher in January and February combined than they were last year. In that context, this month’s dip is unlikely to lead to a fall for the first quarter.
The contraction of the surplus is perhaps a response to the yuan’s appreciation against the Euro, hitting exporters while making imports cheaper. Since May last year, the Euro has lost a quarter of its value against the Chinese currency – it’s currently worth 6.5 yuan, down from 8.6.
It’s true this won’t help economic growth, which has been positively sluggish at around 7% of late, and China’s central bank has responded by cutting interest rates twice since November. The plane is definitely slowing, then, but a hard landing is far from certain. It would take a far more catastrophic collapse than these trade figures show to make to make it so.