China, Trade, and the Ripples

This post originally appeared on the DC Velocity blog.

After establishing new trade surplus record with the US in December, Chinese exports collapsing.  Statistics released on Friday – numbers released by China, not the United States – the expected realignment is underway.

China's politically sensitive trade surplus with the U.S. narrowed sharply to $14.72 billion in February from $27.3 billion in January.  Now these are numbers reported by the Chinese government, so some skepticism is in order.

“Dollar-denominated exports [by China] plunged 20.7 percent for the month of February from a year ago, missing economists' expectations of a 4.8 percent decline, according to a Reuters poll,” reports CNBC.

CNBC continues, “Dollar-denominated imports [by China] fell 5.2 percent in February from a year ago, missing economists' forecast of a 1.4 percent fall.”

On this of the Pacific remain solid.  The unemployment rate held steady at 3.8%.  The latest employment statistics in the United States for February show non-farm job growth at a near standstill, according to the Labor Department; this may be an aberration, but it bears watching.      

US Census Bureau statistics are still lagging due to the month-long government shutdown, so the best government sanctioned balance of trade numbers available are months old.

Bottom line:  the supply chain in the United States remains healthy, logisticians appear to have realigned in anticipation of a collapse in Sino-US trade, manufacturers seem to have found new sources of supply, and employment remains strong.

And China is getting nervous.