Asia Sentinel, 14 Jan 2009, Philip Bowring
Over the Cliff We Go
China's imports collapse tells an ominous story for its trade partners
Forget about the 2.9 percent fall in China's exports in December compared with a year ago. The statistic that should really shock is the fall in China's imports – a mammoth 23 percent last month to $72 billion, pushing its trade surplus to $39 billion.
The data tell several different but interlocking stories. The first is that China's exports are about to fall as dramatically as those of its neighbors, Taiwan and Korea. Taiwan was down 40 percent in December and Korea down 17 percent. Embedded in the Chinese data is the additional statistic that excluding processing trade – the assembling and packaging business with mostly low value-added – imports fell 16 percent. In other words the processing trade was down by close to 30 percent.
China is mostly at the final stage of the manufacturer's supply chain so it is natural that the steepest fall in exports will come after those of Taiwan, Korea and others who supply components to their assembly operations.
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