China Reports A Staggering $1 Trillion Trade Deficit

source

Last year China exported $1 trillion more in value than what it imported and even theses numbers are slightly skewed as they do not include Vietnam and Mexico. We know the Chinese have been rerouting shipments via these 2 countries to get around trade taxes and penalties. Also the rise could be down to trump coming back into office so exporters were increasing their numbers due to a fear of a new tariff hike.

The numbers are up up and what is quite amazing is China has increased it's exports o the EU by over 3% and reduced it's imports to the EU by over 4%. Germany is down by 11%, France -5.9%, Italy -3.2% and only the Netherlands up by over 11% due to the ASML chip making kits. The Gemas were or used to be large exporters and have lost out with China exporting more to to Germany now.

Australia exported over 10% less last year with the big winners being Hong Kong +35.8%, South Korea +12.4% (Chips) and Taiwan +9.3%. The USA dropped by 0.1% which is again not including Vietnam and Mexico which would be added under normal circumstances.

source

Last year China exported nearly 31.5 million motor vehicles and 12 million Electric Vehicles which is what is changing these trade deficit numbers so alarmingly. These are big ticket items and are not a pair of shoes or a food blender so one can see how these numbers add up quickly. I think the bigger story is China sold 43.5 million cars which would normally have been sold by the legacy car manufacturers.

We know China is under pressure time wise as the window is rather tight with CBAM the Carbon Border Adjustment Mechanism coming into play in January 2026 so the Chinese have 11 months of boom time before the brakes are applied. CBAM is what everyone considers the game leveler as the new taxes imposed on China will or are designed to make local European manufacturing cheaper or more competitive. This is not good news for the consumer as I guess the penalties applied to a cheaper product won't make expensive local products any cheaper and dare say those will increase as well.

I do think the biggest problem with having China so dominant in manufacturing is our own fault for allowing local manufacturing to shut down. If countries had protected local manufacturing by imposing import tariffs earlier then the rest of the world would not be in this position.

People are in the assumption that China is cheap and no one can compete yet the truth is they are not cheap and have very little or no competition. The answer is for countries to start making their own products and to compete with the Chinese because the inflated sipping prices and import tariffs make it more viable now than when the factories were closing down in the 1980's and 1990's. I looked into 4 different imported items not made locally and the cost to manufacture was 60% cheaper than the Chinese product. The shift has to reverse at some point and I am hoping CBAM will awaken people to the possibilities available. The problem is we all need capital to get these manufacturing companies going.

Posted Using INLEO

Sort:  

China certainly had one component that made its products comparatively cheaper - that's cheap labour. I wonder how sustaining those are now that their economy is relatively well off and people won't necessarily find those low paying manufacturing jobs as attractive