Apr 13, 2015
Here’s one for the “seriously, you’re surprised?” file: China pegs its currency, the yuan, to the dollar, the dollar soars, taking the yuan with it…and fewer foreigners buy suddenly-much-more-expensive Chinese products. Duh.
China’s Export Engine Loses Steam, Adding to Growth Pressure
China’s exports "unexpectedly" slumped last month, eroding the outlook for one of the economy’s better performing areas in recent months.
Overseas shipments fell 14.6 percent in March from a year earlier in yuan value, the customs administration said in Beijing on Monday. That compared with the median estimate for an 8.2 percent rise in a Bloomberg News survey of analysts. Imports slid 12.3 percent, leaving a trade surplus of 18.16 billion yuan ($3 billion).
The export declines come as China grapples with overcapacity and a property slump. The country’s central bank has relaxed rules on home purchasing, cut interest rates twice and reduced the ratio of reserves banks are required to set aside in the past six months, with economists forecasting further stimulus.
“Consumption is weak, investment is decelerating, and now exports have come in as weaker-than-expected,” said Liu Xuezhi, an economist with Bank of Communications Co. in Shanghai. “Downward pressure on economic growth is increasing, making it more urgent for the government to start rolling out more pro-growth policies.” All thanks to the Dollar-peg according to John and FSN and you know what's going to happen next, broken Dollar-peg and more QE.