The Motley Fool

Quick Thought Of The Week: Wrong

China’s trade surplus with the rest of the world in April was not nearly as good as some economists had predicted. The surplus was only US$13.8 billion, when they had forecast a modest rise from US$32.6 in March to US$35 billion.

The experts weren’t doing any better at predicting China’s export number, either. They had forecast a rise of 2.3%. But China’s exports actually fell 2.7% from a year ago.

Surprisingly, imports rose 4% from a year ago, which also wrong-footed economists. They had pencilled in a decline of 3.6%.

Who would want to be an economist in these difficult times?

It’s hard enough trying to calculate the difference between two big numbers at any time. But amid tricky trade negotiations between the US and China, it is no better than sticking a finger in the air to see which way the wind is blowing.

But given what we know, China’s economy doesn’t look too bad. Sure, exports have fallen. But we need to remember supply chains are relocating – if they haven’t already relocated – to places were the cost of labour is lower….

…. in the first four months of 2019, exports from Vietnam rose 5.8% from a year earlier. Over the same period, Malaysia’s balance of trade has widened from RM 33.4 billion to RM 37 billion.

So, it would seem that China’s loss has been other economies’ gains.

What’s also interesting is that imports into China were higher in March than a year ago. That could be due to stimulus measures introduced by the Chinese government.

On balance, there is nothing frightening in China’s balance of trade. That is unless you are afraid of your own shadow.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your FREE subscription to Take Stock — Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock — Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.

Like us on Facebook to keep up to date with our latest news and articles. The Motley Fool’s purpose is to help the world invest, better. 

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.