from Follow the Money

Tomorrow’s US trade data …

December 13, 2005

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Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

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should be interesting.   I'll miss the actual release though; I won't be back to my desk until later in the day.

The number to watch, at least in my view: non-oil imports.   They have not been growing much this year, but there were (perhaps) some signs of a pickup in September.    Exports should rebound a bit from their September lows too.  Boeing.

China already has released data on its November trade.  A $10.5 billion trade surplus is only small relative to China's exceptionally large surplus in October.

China's y/y export growth in November was around 18.5% -- a substantial slowdown relative to the 30% y/y growth that has characterized recent years.    China's January-November 2005 exports are, for example, about 30% higher than the comparable 2004 number.   I would not read too much into this - China's exports really surged in 2004, so generating 20% y/y growth off the (high) November and December 2004 base would be an impressive accomplishment.   December in particular (if memory serves).   And remember, this year's growth is not being turbocharged by rising dollar values of any euro-denominated Chinese exports. 

I have not (yet) sat down and tried to make an educated guess about China's 2006 trade surplus.  Import growth does seem to be picking up (Jonathan Anderson points to a surge in construction).   But if oil stabilizes at current levels, China's oil import bill won't increase as fast as it did this year either.    Export growth does seem to be slowing somewhat - and it is not unreasonable to expect that slowdown to be sustained.    China's exports are no longer small by any measure, so continuing to generate 30% growth off an ever rising base implies ever bigger increases in the dollar amount of China's exports.   Plus, the RMB has appreciated significantly against most of Europe, and Europe is now about as important a trading partner for China as the US. 

But since China's export base is now significantly larger than its import base, imports will have to grow faster than exports just to keep China's $100 billion or so (overall) trade surplus with the world from increasing. 

Of course, if China revises its GDP number up in 2006 (a reasonable thing to do), that should help to lower China's trade surplus relative to its GDP ...

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