Ali’s blog

Mostly quant stuff with occasional digressions

The Chinese trade surplus

Posted by alifinmath on January 11, 2008

The FT again, with a piece on the burgeoning Chinese trade surplus:

Europe also replaced the US as China’s largest export market. Sales to an expanded European Union grew by 29.2 per cent in 2007, compared to just 14 per cent to the US.

Europe’s bilateral deficit, however, remains substantially less than that of the US, because EU countries export goods to China nearly double in value to those from America.

This is revealing. In the brave new world we’re being driven to willy-nilly, the rest of the world won’t be as dependent on the USA as a market of last resort. Nor will it be as true as it was in the past that when the USA sneezes, Europe gets a cold and the rest of the world develops a fever. This reflects the rise of the rest of the world (or alternatively, the relative decline of the USA),  which has been going on for decades. With the passing of time, Chinese growth and prosperity will be ever further delinked from what happens in the USA (though of course there will always be an impact, given our global economy).

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