Wednesday, December 12, 2007

China Trade

Another month passes. Here's two more charts.

I have adjusted the data for inflation and then seasonally adjusted it (using the tool below). We're simply keeping up with inflation lately, much like we did during the recession of 2001 perhaps. And when I say we are keeping up with inflation, I mean OUR currently relatively low inflation, not China's currently relatively high inflation that's seemingly getting worse by the day. Sorry China!

I don't know what the problem is. Why is the growth in this chart vanishing before our very eyes? Can't we just keep printing more money and then ship it over to China endlessly? What's the harm? *sarcasm* They still seem to want it for some reason. Their only gripe is that it is no longer as strong as it once was. Well, d'uh!

China tells US to fix its own economic problems
"(The yuan) is not the key issue. Currently my focus is more on the depreciation of the US dollar and its possible impact and repercussions for the world economy," Chen told reporters on the sidelines of the conference.

"I sincerely wish to see a scenario where the US economy is getting stronger and the US dollar is getting stronger."

Wouldn't we all. Too bad the monetary printing presses can't print actual prosperity. Illusions of prosperity are "poor" substitutes. Hey, I resemble that remark!

Chen, here's a thought. Use our money to buy something from us. Problem solved! Or are you too busy hoarding our currency in case your entire banking system falls apart? You know, the banking system that can't even afford to pay a positive real rate of return during one of the biggest economic booms in all of civilized man. Some conundrum you've got there.

Tight monetary policy is key to the future
And as prices for various commodities on the international market keep on increasing, it makes more difficult to bring down domestic prices.

Because of the CPI's continuous rise, the actual interest rate, or the inflation-adjusted interest rate, has been kept negative. It was 2.82 percent under zero in October after several rounds of interest rate hikes.

Or how about this?

Worse, the China Banking Regulatory Commission, the country's banking watchdog, found in a recent study that a considerable amount of bank loans were involved in fake or deceptive property deals.

Want a truly twisted and warped economy? Send real interest rates below zero and watch the hilarity ensue. As seen in our own subprime fiasco, negative real interest rates get people to do the craziest things. Who knows what's been going on in China. Just how many factories were financed using egregiously cheap money, anyway? I don't know. Does anyone?

China Industrial Output Grows at Slowest Pace of 2007 (Update1)
The nation is at risk of industrial overcapacity.

One need look no further than our housing capacity to see what cheap money can do. At some point the cheap part goes away though, and everything suddenly seems to turn expensive. Just my opinion of course.

See Also:
China Trade and Europe

Source Data:
U.S. Census Bureau: U.S. International Trade in Goods and Services
St. Louis Fed: Consumer Price Index for All Urban Consumers: All Items (Not Seasonally Adjusted)
The X-12-ARIMA Seasonal Adjustment Program


Anonymous said...

awesome charts as always StagMark - though I am curious to see what the Chinese exports to us look like adjusted for Chinese inflation!

Anonymous said...

"Chen, here's a thought. Use our money to buy something from us." Problem solved!

They try to Mark, some of the companies or poducts they want to buy are just to sensitive for our congress. They want assets not trinkets. Guess they will just have to settle for our food instead.


Stagflationary Mark said...


Yes, adjusting for Chinese inflation must drive the Chinese a bit nuts these days. They are going to be SO hurtin' in my opinion, much like we are.


The latest data shows someone chose to buy a lot of civilian aircraft from us. Whew! I very much approve! I have very little need to stock my pantry with civilian aircraft!

Anonymous said...


Read a factoid that Chinese investment in production capacity ramped by over 20% in the last (quarter? not sure) - but that is going to be one interesting ride if the developed consumer markets tank in synchrony - could get fugly real fast...

Stagflationary Mark said...


Duck, cover, drop, and roll is nature's solution to overheating problems, for what that's worth.