Tuesday, April 3, 2012

2012 Global Trade Balance Target

We, Mr China, conclude that our own China global trade balance target should be USD$120.2 billion in 2012.

In 2011, China global trade balance already dropped to USD$155.1 billion, down by -15% YoY, less than the amount of USD$192.1 billion that we originally expected. This indicates that China exports keep facing challenges on weak global demands, while its imports keep growing on relatively-strong domestic demands. Therefore, the net trade balance (exports minus imports) also continues to drop although Chinese economy growth can be maintained.

Our independent economic expert team has calculated fair values of China imports and exports for each month in 2012. After summing-up all these estimated values for the whole year, our own target for the China global trade balance in 2012 will be USD$120.2 billion, down by -23% YoY.

Global Trade balance chart

Current China Global Trade Balance Chart

We have the following assumptions for our calculated target:
(i) The net China global trade balance will remain positive in 2012 (i.e.: an annual trade surplus, means more exports than imports).
(ii) The amount of China trade surplus will drop as the growth rate of China exports will be slower than imports.
(iii) It is our forecast that the global economy will continue to slow down in 2012.

Up to this moment, we have to say that our trade balance target is a bit too preliminary. In fact, after the U.S. announced to set up a new office to reinforce trade protection against China in February 2012, a trade war between the U.S. and China will have no way to ease. As you know, any kind of war can only hurt both parties and can benefit no one. While we do not know yet for what degree of U.S. protection will become, we are still quite sure that U.S. politicians will never give up protecting businesses of their local companies against foreign companies, although this kind of protection may only be helping U.S. companies for a very short period of time. Finally no U.S. companies will win this war because any governmental protection can only decrease operational efficiency of these U.S. companies. In addition, it is also likely that Chinese government will implement counter measures or even similar protection policies for fighting against U.S. companies as well. Anyway, this trade war surely will induce uncertainty to the performance of China exports and has been making our forecast of China trade balance, globally includes the US-China trades, difficult to estimate.

In Europe, sovereign debt crisis is not totally fixed and economic outlook remains weak as long as European countries have to cut fiscal deficits and thus to reduce governmental expenditures. There is still no time table for when this European sovereign debt crisis can be fully fixed, so that European countries can have their economies recovered and can also fully resume their original demands for Chinese imported goods. Otherwise, there is still strong pressure on Chinese exports to Europe and thus strong export growth cannot be expected. This situation, however, will only be improved if European countries can get into real solutions for dealing with their own fiscal deficits as well as their sovereign debt crisis. The USD$120.2 billion is surely our preliminary target value of China global trade balance in 2012, we may consider to raise or lower our target value at the later stage if the factors affecting China global trades get to change.

Additional China Economic Target(s):
Summary Table of All Our Economic Targets for China


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