According to Julian Evans-Pritchard, an economist at Capital Economics in Singapore, the severe fall in exports largely reflected changes in the timing of the Lunar Year in China this year.
"In 2015, the holiday fell unusually late which meant that more of the pre-holiday rush to meet orders and less of the post holiday disruptions took place in February, causing exports to jump 48.9 percent year-on-year," he said.
I am not familiar with any of this, but could a lower SCSI be caused by more shipping supply being available as opposed to fewer containers being shipped? Is there an index that tracks the number of containers shipped?
Perhaps this is a dumb question, but if it fell by 25% and the prediction was it falling by 15%, do they mean to imply those who made that month's prediction weren't aware of the particulars of Lunar New Year?
Not a dumb question at all. Markets often behave irrationally, but they aren't that stupid. Market expectations (-14.5% export growth) definitely factor in seasonality. So it's very bad news.
To make matters worse, import growth (-13.8%) was also lower than market expectations (-12%).
As mentioned below, this suggests contracting overseas demand for Chinese exports AND contracting domestic consumption. Which adds up to lower than expected Chinese economic production.
We'll probably see another Chinese stimulus package soon. Hopefully they manage to deploy it without exacerbating the capital mis-allocation and higher private debt that the previous one caused (mostly poured into residential real-estate construction and speculation).
""China will face a more challenging situation in trade this year than 2015. Both imports and exports in February fell more than our expectations."
""China's exports declined the most since May 2009, suggesting that the overly strong CNY exchange rate has become an obstacle for the external sector"
""February's trade data is really poor and that will exert depreciation pressure on the yuan."
Pretty much this - Nothing happens in China during the new year celebration. We've had recent contact with Chinese companies who all warned us that there would be no progress until after the holiday.
Not too long ago I pointed out an increase in anti-China propaganda. Seems this definitely is the case.
A 25% drop from a 50% increase the year before (due to what is probably one of, if not the biggest holidays in the world) is still an increase from 2 years prior. Anyhow, this is just funny timing things.
If you set the chart to 10 years, you'll notice it's more or less in line with the average. If there is a slowdown (hard to tell), it's fairly mild, and would be more or less consistent with worldwide demand. It's just very dramatic for one month because of the holiday.
In a year, I have no doubt that, contrary to what some observers are claiming, China will be alive and well.
It probably has little to do with anti-China propaganda. Financial news has always reported junk like this with clickbait headlines and a few cherry picked numbers to make a story from nothing.
As someone who's clients are all Chinese - there is not a better time to be in the Chinese market.
China is quickly translating into a service powerhouse, I wouldn't be surprised if china will stop needing wallstreet to finance itself within the next 5 years.
If you are in the SaaS business - china is where you need to be to make bank. Chinese millennials are rich, optimistic and are amazingly good adopters of technology.
The chinese software market is also extremely young - unlike the saturated western ones. So even building simple service-automation/web-service will make you millions.
Its almost laughable to me these days that an amazing company like netflix can only charge 5 dollars in america while in china people are spending insane amount of money online for really simple services.
"Its almost laughable to me these days that an amazing company like netflix can only charge 5 dollars in america while in china people are spending insane amount of money online for really simple services."
I'm not sure where you get this impression. Online services in China are extremely competitive. Netflix is $8 per month in the US, or $10 per month if you want HD. Tencent video in China is 20RMB (~$3) per month. Most of their content is available for free if you don't mind ads.
Incomes in China are largely equal in number to about double the number, disregarding currency conversion. For example a low end worker in the USA makes 1000 USD a month while a similar worker in China makes 1000 rmb. A fresh graduate engineer may make 5k USD a month in the USA and may make 2500 to 10k rmb depending on skill and location in China.
That said 20 rmb should not be considered 3 dollars, it should be viewed as 10 to 20 dollars.
Some more points of comparison: Average hotel 100 rmb, breakfast 10 rmb, cell phone bill (depending on data) 50 to 200 rmb.
Well when you compare the average income of an American vs Chinese which haven't reached even Japan's level, I would say Japan would be a better market for SaaS considering they have the money to pay (or should according to income levels).
Also consider the non existant IP laws or any type of bad actor reducing enforcement mechanisms that exist in North America and Europe, means you are in a much more crowded and competitive market.
I am an American working in a Chinese tech company, and I was also curious to know where you get this sense of being willing to spend more. Most of the Netflix/Spotify/Dropbox/Hulu equivalents are far cheaper and have far more extensive free options than in the West. Some companies certainly make bank on online games here though!
Aside from that, I agree on the market being young and having different possibilities here than in the west, and also with people being good adopters of technology.
No one is saying you can't make money in China anymore, only that the data coming out of China is really bad considering their huge growth over the past 20 years. They have a growth target between 6.5% and 7%, in the U.S. we would kill for that...but in China that is very much subpar.
I agree with you - its irrelevant to the discussion at hand.
What I am merrily pointing out is that as china moves from a export oriented country into a service based economy, Reducing its import/export is a target . Since their own leadership wants china to transition to a "new normal".
China has a huge cannon ( in terms of controlling a vast amount of humanity's capable hands ). It seems now instead of using it to awash the world with manufactured good they are refocusing it on services.
Measuring output from services is extremely hard - since its investment in human capital, rather than physical goods.
The point I am trying to make is that this is a good thing. It means their is going to be investment in law,education,fiance,software,intellectual property,health-care ...
This will give breathing room for other developing countries to take up china's slack and allow china to innovate in the place where it really helps humanity move forward. We all want cheaper healthcare and cheaper education.
US citizens getting worried about China's finances and growth are akin to peasants getting worried about the finances of noblemen.
Right now the US Congress is seriously considering giving corporations a "tax forgiveness" to the tune of $400 billion. When US citizens are abroad, they have to pay US taxes even if they haven't set foot on US territory for years. That rule doesn't apply to corporations. Do you find that fair?
The establishment media continually fools US citizens by giving them distractions such as: "China is crashing!!!" - "Chinese growth is going down!!!" - "Corruption in China rampant!!!" - "China preparing for WAR!!!"
Easy distractions like these have only one purpose: to distract US citizens from noticing that they are being defrauded by everyone they put in charge to run their country. It's as simple as that.
> I wouldn't be surprised if china will stop needing wallstreet to finance itself within the next 5 years.
China doesn't currently need Wall Street, they have their own powerful central bank and tons of domestically held debt thanks to their very high export surplus and savings rate.
You know how I know when to pull my money out from the stock market? When your neighbor tells you to invest money in the stock market. The idea is that there's a big lag between when the smart money have left and when ordinary people start crowding in.
Same with China. Now I'm hearing from friends somehow China is the place to be that gravity is Falun Gong and doesn't exist and China will overtake United States in 10 years, and other extreme optimism that reminds me a lot about past bubbles.
But I'm interested to know if you have any source on SaaS in China.
I am optimistic about China in the long run but not with the current communist government. Only when China is unrestricted from free trade of knowledge, information and expression, only when such basic human rights guaranteed in other developed Western nations are present, can China truly become something worthy to be taken seriously.
Who want's to live in a China even Chinese people don't like or want to stay in? If you haven't noticed all the rich chinese people are getting the fuck out of China, people are so desperate that they are willing to embezzle, corrupt, steal, kill, fuck over anything or anyone. You really expect SV companies to uproot and start a new life in China?
> Who want's to live in a China even Chinese people don't like or want to stay in
It seem's that you are naive. Rich people are leaving because the standard of living is higher at the moment, but this will change. China is still developing, having spent the last 50 years lifting hundreds of millions of people out of poverty. Meanwhile, poverty in the US has increased to 14%. China will overtake the US as the dominant global superpower this century.
You'd better get used to that Chinese government, it's here to stay. Besides, what do you want? For the Communist party to devolve into US congress?
And about those supposed Chinese people who don't want to stay - just like some minority of the US population doesn't want to pay their fair share of taxes or contribute positively to their local society and have thus mastered the shell company and tax haven game, there exists an equivalent minority of the Chinese population who don't want to do their part either and who are well-off enough to be noticed by foreign media when they move in expensive neighborhoods in western countries. The Chinese population being higher, that percentage of rich people fleeing will also be higher.
And about China being taken seriously - are you really that naïve NOT to take them seriously? Do you not take the formidable number of Chinese people that have been lifted off abject poverty seriously?
Do you not take the millions of kilometers of railroad that have been built both within and outside China by Chinese companies and people seriously?
Do you not take the infrastructure that has been built, no questions asked, in Africa seriously while western nations have only taken from Africa while giving nothing in return except conflict and weapons?
Do you not take seriously the information that a Chinese company, COSCO, recently became the operator of Greece's ports?
Do you not take seriously that Chinese entrepreneurs, often being from a modest background themselves, left their country for Sub-Saharian Africa and Egypt and even Ethiopia and have become of the main providers of employment and growth and even HOPE-you-can-believe-in in those countries?
I'm not a "China thumper", I'm not Chinese or even Asian - I just see the world as it is. I've seen the corruption in US government and I know about the pentagon's revolving door. It's also obvious that the British and to a somewhat lesser extent the French governments are sellouts of the oligarchs. If you want to argue about corruption in the Chinese government know first that their officials and their families are shown what life is like in prison when they take office so that they know the consequences of temptation.
Maybe next you'd want to argue that China allegedly "stole" some islands in the South China Sea and is now threatening everyone, allegedly. Well, I'd argue that in 2011 an agreement was reached among SOVEREIGN (very important here and thus in caps) ASEAN nations and the Philippines decided to call in the oh-so-righteous United States to get things moving in their favor, thus the current clusterfuck.
And besides the US and Britain already set the precedent by stealing the Chagos Archipelago and within it, Diego Garcia. Also note that they also unceremoniously removed all the inhabitants of these islands who were only allowed to carry ONE SINGLE BRIEFCASE worth of their possessions when they were put in the bottom of boats where quite a few got ill and even died.
Then the US and Britain went on and declared the Chagos a marine protected area to obliterate any possibility that the Chagossians could return to their land.
A marine protected area where they could safely keep nuclear weapons...
What China is doing in the South China Sea, building islands and infrastructure to fight against piracy and more important, ensure safe harbor for ships in a world that will be increasingly affected by climate change, is patty cakes in comparison to what western nations have done.
I believe the world needs balance - therefore it can't all be the oh-so-righteous Western system of "governance". A balance of power, a balance of opinions, a balance of superpowers. And having seen how corrupt and destructive Western governments have been and can be, my opinion -and mine only - is that China represent a good counterpoint to that corruption and destruction. China represents progress and hope in the long run. It's more likely that universal basic income and a post-scarcity society will come,and will be sustained, from Chinese culture and system of government than anywhere else. Why? Because it's the country where even farmers are crazy enough to build helicopters, submarines and robots for a hobby and in this world, the ones who are crazy enough to think they can change the world are the ones who do.
It's common (in the economics/financial press) to refer to year-on-year changes in this way. This article is in the mainstream press, though, so perhaps they should have spelled it out.
Link bait or not, it's objectively grim news. Chinese February trade data shows exports -25.4% yoy (vs. -14.5% market expectation), and imports down -13.8% yoy (vs. -12% market expectation). Market expectations factor in seasonality.
So lower than expected overseas demand for Chinese exports, and simultaneously lower than expected Chinese domestic consumption. It's a double-whammy negative for Chinese economic production...
Here's some analysis from HSBC covering both Jan & Feb (so figures are different):
Exports for January-February period declined by 17.9% y-o-y, the lowest since 2012. Exports to all major markets saw broad-based weaknesses, with shipments to ASEAN countries contracting the most. Unfavourable base effects and possible seasonal reasons aside, weak external demand is still the main reason for today’s export slump. Imports remained in deep contraction in Jan-Feb despite the recent stabilisation in commodity prices, and this mostly reflected sluggish domestic demand...
...Overall, YTD trade data pointed to an increasingly challenging demand environment for China’s exports, which will likely put further pressure on domestic production. With risks to growth on the downside, and little support from external demand, a more decisive stimulus package targeted at lifting domestic demand and countering deflation is warranted.
Fortune: "In February 2015, exports jumped 48%. So this February exports were up against a strong performance last year."
The 25% number needs units. Is that in yuan, dollars, or TEU?
The Port of Los Angeles publishes container statistics in TEU.[1] February isn't up yet, though. January was up 33% over last year. So this isn't showing up at the physical container level. Container statistics are useful because they're actual counts, not some kind of estimate.
"Customs figures showed exports fell to $126.1bn (£88.5bn) last month. That was down 25.4% from a year earlier and worse than an expected fall of about 15%. "
But if you are measuring this in USD, and the deprecated yuan means more volume for less dollars.
Readit News
"""
According to Julian Evans-Pritchard, an economist at Capital Economics in Singapore, the severe fall in exports largely reflected changes in the timing of the Lunar Year in China this year.
"In 2015, the holiday fell unusually late which meant that more of the pre-holiday rush to meet orders and less of the post holiday disruptions took place in February, causing exports to jump 48.9 percent year-on-year," he said.
"""
[1] http://www1.chineseshipping.com.cn/en/indices/scfinew.jsp
In New Zealand.
To make matters worse, import growth (-13.8%) was also lower than market expectations (-12%).
As mentioned below, this suggests contracting overseas demand for Chinese exports AND contracting domestic consumption. Which adds up to lower than expected Chinese economic production.
We'll probably see another Chinese stimulus package soon. Hopefully they manage to deploy it without exacerbating the capital mis-allocation and higher private debt that the previous one caused (mostly poured into residential real-estate construction and speculation).
"China to cut 1.8m jobs in coal and steel sectors" [1]
it does make one take notice
[1] http://www.theguardian.com/business/2016/feb/29/china-to-cut...
""China will face a more challenging situation in trade this year than 2015. Both imports and exports in February fell more than our expectations."
""China's exports declined the most since May 2009, suggesting that the overly strong CNY exchange rate has become an obstacle for the external sector"
""February's trade data is really poor and that will exert depreciation pressure on the yuan."
http://news.forexlive.com/!/china-export-collapse-in-january...
Dead Comment
Deleted Comment
A 25% drop from a 50% increase the year before (due to what is probably one of, if not the biggest holidays in the world) is still an increase from 2 years prior. Anyhow, this is just funny timing things.
http://www.tradingeconomics.com/china/exports
If you set the chart to 10 years, you'll notice it's more or less in line with the average. If there is a slowdown (hard to tell), it's fairly mild, and would be more or less consistent with worldwide demand. It's just very dramatic for one month because of the holiday.
In a year, I have no doubt that, contrary to what some observers are claiming, China will be alive and well.
As someone who's clients are all Chinese - there is not a better time to be in the Chinese market.
China is quickly translating into a service powerhouse, I wouldn't be surprised if china will stop needing wallstreet to finance itself within the next 5 years.
If you are in the SaaS business - china is where you need to be to make bank. Chinese millennials are rich, optimistic and are amazingly good adopters of technology.
The chinese software market is also extremely young - unlike the saturated western ones. So even building simple service-automation/web-service will make you millions.
Its almost laughable to me these days that an amazing company like netflix can only charge 5 dollars in america while in china people are spending insane amount of money online for really simple services.
I'm not sure where you get this impression. Online services in China are extremely competitive. Netflix is $8 per month in the US, or $10 per month if you want HD. Tencent video in China is 20RMB (~$3) per month. Most of their content is available for free if you don't mind ads.
Another comparison:
- Dropbox: 1TB for $99 per year.
- Baidu Yun: 5TB for $15 per year.
That said 20 rmb should not be considered 3 dollars, it should be viewed as 10 to 20 dollars.
Some more points of comparison: Average hotel 100 rmb, breakfast 10 rmb, cell phone bill (depending on data) 50 to 200 rmb.
Also consider the non existant IP laws or any type of bad actor reducing enforcement mechanisms that exist in North America and Europe, means you are in a much more crowded and competitive market.
Aside from that, I agree on the market being young and having different possibilities here than in the west, and also with people being good adopters of technology.
What I am merrily pointing out is that as china moves from a export oriented country into a service based economy, Reducing its import/export is a target . Since their own leadership wants china to transition to a "new normal".
China has a huge cannon ( in terms of controlling a vast amount of humanity's capable hands ). It seems now instead of using it to awash the world with manufactured good they are refocusing it on services.
Measuring output from services is extremely hard - since its investment in human capital, rather than physical goods.
The point I am trying to make is that this is a good thing. It means their is going to be investment in law,education,fiance,software,intellectual property,health-care ...
This will give breathing room for other developing countries to take up china's slack and allow china to innovate in the place where it really helps humanity move forward. We all want cheaper healthcare and cheaper education.
TL:DR good news !
Right now the US Congress is seriously considering giving corporations a "tax forgiveness" to the tune of $400 billion. When US citizens are abroad, they have to pay US taxes even if they haven't set foot on US territory for years. That rule doesn't apply to corporations. Do you find that fair?
The establishment media continually fools US citizens by giving them distractions such as: "China is crashing!!!" - "Chinese growth is going down!!!" - "Corruption in China rampant!!!" - "China preparing for WAR!!!"
Easy distractions like these have only one purpose: to distract US citizens from noticing that they are being defrauded by everyone they put in charge to run their country. It's as simple as that.
China doesn't currently need Wall Street, they have their own powerful central bank and tons of domestically held debt thanks to their very high export surplus and savings rate.
Same with China. Now I'm hearing from friends somehow China is the place to be that gravity is Falun Gong and doesn't exist and China will overtake United States in 10 years, and other extreme optimism that reminds me a lot about past bubbles.
But I'm interested to know if you have any source on SaaS in China.
I am optimistic about China in the long run but not with the current communist government. Only when China is unrestricted from free trade of knowledge, information and expression, only when such basic human rights guaranteed in other developed Western nations are present, can China truly become something worthy to be taken seriously.
Who want's to live in a China even Chinese people don't like or want to stay in? If you haven't noticed all the rich chinese people are getting the fuck out of China, people are so desperate that they are willing to embezzle, corrupt, steal, kill, fuck over anything or anyone. You really expect SV companies to uproot and start a new life in China?
Are China thumpers really this naive?
It seem's that you are naive. Rich people are leaving because the standard of living is higher at the moment, but this will change. China is still developing, having spent the last 50 years lifting hundreds of millions of people out of poverty. Meanwhile, poverty in the US has increased to 14%. China will overtake the US as the dominant global superpower this century.
And about those supposed Chinese people who don't want to stay - just like some minority of the US population doesn't want to pay their fair share of taxes or contribute positively to their local society and have thus mastered the shell company and tax haven game, there exists an equivalent minority of the Chinese population who don't want to do their part either and who are well-off enough to be noticed by foreign media when they move in expensive neighborhoods in western countries. The Chinese population being higher, that percentage of rich people fleeing will also be higher.
And about China being taken seriously - are you really that naïve NOT to take them seriously? Do you not take the formidable number of Chinese people that have been lifted off abject poverty seriously?
Do you not take the millions of kilometers of railroad that have been built both within and outside China by Chinese companies and people seriously?
Do you not take the infrastructure that has been built, no questions asked, in Africa seriously while western nations have only taken from Africa while giving nothing in return except conflict and weapons?
Do you not take seriously the information that a Chinese company, COSCO, recently became the operator of Greece's ports?
Do you not take seriously that Chinese entrepreneurs, often being from a modest background themselves, left their country for Sub-Saharian Africa and Egypt and even Ethiopia and have become of the main providers of employment and growth and even HOPE-you-can-believe-in in those countries?
I'm not a "China thumper", I'm not Chinese or even Asian - I just see the world as it is. I've seen the corruption in US government and I know about the pentagon's revolving door. It's also obvious that the British and to a somewhat lesser extent the French governments are sellouts of the oligarchs. If you want to argue about corruption in the Chinese government know first that their officials and their families are shown what life is like in prison when they take office so that they know the consequences of temptation.
Maybe next you'd want to argue that China allegedly "stole" some islands in the South China Sea and is now threatening everyone, allegedly. Well, I'd argue that in 2011 an agreement was reached among SOVEREIGN (very important here and thus in caps) ASEAN nations and the Philippines decided to call in the oh-so-righteous United States to get things moving in their favor, thus the current clusterfuck.
And besides the US and Britain already set the precedent by stealing the Chagos Archipelago and within it, Diego Garcia. Also note that they also unceremoniously removed all the inhabitants of these islands who were only allowed to carry ONE SINGLE BRIEFCASE worth of their possessions when they were put in the bottom of boats where quite a few got ill and even died.
Then the US and Britain went on and declared the Chagos a marine protected area to obliterate any possibility that the Chagossians could return to their land.
A marine protected area where they could safely keep nuclear weapons...
What China is doing in the South China Sea, building islands and infrastructure to fight against piracy and more important, ensure safe harbor for ships in a world that will be increasingly affected by climate change, is patty cakes in comparison to what western nations have done.
I believe the world needs balance - therefore it can't all be the oh-so-righteous Western system of "governance". A balance of power, a balance of opinions, a balance of superpowers. And having seen how corrupt and destructive Western governments have been and can be, my opinion -and mine only - is that China represent a good counterpoint to that corruption and destruction. China represents progress and hope in the long run. It's more likely that universal basic income and a post-scarcity society will come,and will be sustained, from Chinese culture and system of government than anywhere else. Why? Because it's the country where even farmers are crazy enough to build helicopters, submarines and robots for a hobby and in this world, the ones who are crazy enough to think they can change the world are the ones who do.
Exports dropped sharply by 25.4% from a year earlier
I'm not sure about anyone else, but "exports plunge 25% in February" makes me think that it plunged 25% from January to February.
So lower than expected overseas demand for Chinese exports, and simultaneously lower than expected Chinese domestic consumption. It's a double-whammy negative for Chinese economic production...
Here's some analysis from HSBC covering both Jan & Feb (so figures are different):
Exports for January-February period declined by 17.9% y-o-y, the lowest since 2012. Exports to all major markets saw broad-based weaknesses, with shipments to ASEAN countries contracting the most. Unfavourable base effects and possible seasonal reasons aside, weak external demand is still the main reason for today’s export slump. Imports remained in deep contraction in Jan-Feb despite the recent stabilisation in commodity prices, and this mostly reflected sluggish domestic demand...
...Overall, YTD trade data pointed to an increasingly challenging demand environment for China’s exports, which will likely put further pressure on domestic production. With risks to growth on the downside, and little support from external demand, a more decisive stimulus package targeted at lifting domestic demand and countering deflation is warranted.
The 25% number needs units. Is that in yuan, dollars, or TEU?
The Port of Los Angeles publishes container statistics in TEU.[1] February isn't up yet, though. January was up 33% over last year. So this isn't showing up at the physical container level. Container statistics are useful because they're actual counts, not some kind of estimate.
[1] https://www.portoflosangeles.org/Stats/stats_2016.html
Deleted Comment
But if you are measuring this in USD, and the deprecated yuan means more volume for less dollars.