Unexpected Rise in Chinese Exports

For most nations, when imports begins to decline, the amount of exports usually follows suit since it is difficult to continue sending items when there may be nothing with which to make them. However, China is changing this common perception as their exports are continually rising, and have been for the last several months, with a total increase 5.5% in June alone. This leaves China receiving a number of mixed signals as it appears their economy is beginning to improve, but that the middle class, which tends to spur the economy the most, is stalling.

For most nations, when imports begins to decline, the amount of exports usually follows suit since it is difficult to continue sending items when there may be nothing with which to make them. However, China is changing this common perception as their exports are continually rising, and have been for the last several months, with a total increase 5.5% in June alone. This leaves China receiving a number of mixed signals as it appears their economy is beginning to improve, but that the middle class, which tends to spur the economy the most, is stalling.

Because of the growing exports, Chinese officials believe they will soon reach their overall goal of a 7.5% growth for 2014, but when it comes to the combined percentage for both exports and imports, they are far off the track. As it stands, their combined amount has only risen by 0.2% for the year so far – which is showing the discrepancy between international demands.

With fewer demands abroad, officials are unclear exactly how these new exports are spurring the Chinese economy, but the Chinese government is beginning to implement plans that will allow them to continue their recovery. One of these programs is attempting to stimulate domestic demand, which would localize their money and vastly improve the economy. However, with import numbers still low, the country is finding it difficult to find a happy medium between the two.

Continuous Improvement

Despite the ups and downs of the export and import numbers, Chinese officials are not too worried about the country overall. Considering they exported $212.9 billion in July, they are easily offsetting the $165.6 billion from imports. Based on these numbers, it is obvious that the domestic stimulus programs are not succeeding, but demand abroad seems to continue on its uphill slope.

Aside from all of the imports and exports, the Chinese government is also seeing a vast amount of improvement in their trade surplus, which took a hefty hit in the aftermath of the financial crisis. In fact, in the last year, the Chinese trade surplus doubled to $47.3 billion, with their trade surplus in the European Union having the greatest impact. The fact that the European Union has contributed the most to the Chinese trade surplus is intriguing considering their current financial difficulties, but at the same time, it has allowed them to receive the necessary materials for construction jobs and projects. As such, the growth between the two has certainly helped stimulate both economies.

Effects on World Economy

China currently attributes 12% of the world’s output, meaning that without them, our world would quickly fall to pieces economically. Knowing this, analysts are constantly reminding everyone how vital the Chinese government is, and how their policies sometimes affect the entire world, rather than just their own nation. But there are many countries (Vietnam, South Korea, USA, Japan, etc.) who question Chinese rising military power that goes in conjunction with their healthy economy.

At the same time though, the rest of the world is left to wonder if the economy will continue to recover, or if the few small downfalls will halt China in its tracks.