China trade, loan surge boosts economy, inflation lurks

Comments (3)
dexterbland wrote:

“Exports rose 12.4 percent after adjusting for the holiday factor while imports rose 3.4 percent.”

That doesn’t seem an especially strong figure for imports, particularly in light of the overall target for trade growth of 10%. What it shows is China’s surplus is still expanding, not much use to the rest of the world.

Feb 08, 2013 12:28am EST  --  Report as abuse
Pete_Murphy wrote:

The growth in China’s exports is a measure of the extent to which trade with China has devastated America’s manufacturing sector. And it necessitates greater deficit spending by the federal government in order to inject those dollars back into the economy. A big trade deficit is a prelude to another recession for the American economy.

Feb 08, 2013 7:42am EST  --  Report as abuse
ncshu2 wrote:

@Peter_Murphy

Regarding to your comment about the dollar supply in US economy related to the US trade deficit with China:

According to the current Chinese governmental regulation, all the foreign currency including US dollar, the Chinese business earned from the international trade has to be changed back to the Chinese currency at the government controlled commercial banks. Then these commercial banks go to the central bank to relinquish the dollars they get from their customers in echange for local Chinese currency again. At the moment there is no currency exchange market for the Chinese currency. As a result, the Chinese government holds astronomical amount of foreign currencies, simply by printing Chinese currency to extract the foreign currencies from the trade surplus with the western industrial countries. What does the Chinese government do with the huge amount of foreign currency? One of the major outlet is the US government securities.

So does the US trade deficit indicate the extent of the repercussion the US manufacturing sector feels from the trade with China at the moment? Absolutely. But coming to the change of the money supply as the result of trade deficit with China, the influence may not be so paramount as you expected.

Feb 08, 2013 10:11am EST  --  Report as abuse
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