China’s General Administration of Customs said the nation’s trade surplus rose to $22.3 billion in June from $13.1 billion in May. Exports reached $162 billion, up 17.9% over the same month last year. Imports climbed at a 19.3% annual rate and hit $139.7 billion last month.
The news creates a puzzle. China’s consumer economy may not have slowed as much as anticipated, even with inflation raging. Wages have risen sharply over the last several years and the large Chinese middle class may still be purchasing goods and services at a brisk pace. It is also possible that normally frugal Chinese have dipped into their savings.
Export numbers are even more confusing. Slowing economies in the US, UK, and EU should be less active importers of Chinese finished goods. The Japanese economy is at a standstill because of the March earthquake. It is one of China’s largest trade partners.
Expert Carl Weinberg, chief economist of High Frequency Economic, told CNNMoney that “Their trade balance is pretty darn good and is going to continue to remain good, but trade is not as important to their economy as we think it is. With 900 million people left on the farms to move into the cities, that’s what’s going to drive growth.” That assume that an outsider can gauge whether the people who have relocated to urban centers have become voracious consumers, which is still open to question.
The Chinese results do not make much sense on the face of it, unless China’s economy and those of its trade partners appear to be modestly stronger than expected.
Douglas A. McIntyre