It's a very strange world recovery that doesn't show up in world trade numbers.
(Bloomberg) -- Japan’s exports fell for a tenth straight month in July as demand from all of the nation’s major markets deteriorated.
Shipments abroad tumbled 36.5 percent from a year earlier, steeper than June’s 35.7 percent drop, the Finance Ministry said today in Tokyo.
It isn't just Japan. Hong Kong is also far below last year's recessionary levels, and worse than last month. Mainland China is far below last year's recessionary levels as well.
The drop in world trade is also showing up in the Baltic Dry Index.
The Baltic Dry Index, already down 26% this month, is likely to fall further during the rest of the quarter as China continues to cut back on commodity purchases.
The BDI is often seen as a key leading indicator for global economic growth and production, and the August decline has been the sharpest since October's 72% skid, when freight rates were heading below break-even levels and the shipping industry was gripped with uncertainty.
For the United States
The collapse in global trade, while the absolute numbers, i.e. exports show (as well as industrial production and so on) we're not producing, in a way it also helps because imports dropped off more than exports and helped the deficit numbers (which in turn helped the GDP figures).
We also have the largest domestic economy, so we could make up a large portion of that domestically.
But export driven economies, i.e. China, Japan, they seem to be intent on returning to this massive "let's sell to the American consumer all of our stuff" agenda...
I mean the China non-oil trade deficit is 83% of the total U.S. trade deficit...
so if the collapse of global trade means the U.S. is buying less Chinese made products...I don't see this as a bad thing.
But considering how all are looking to China to led the globe out of this recession....what does that really mean for the United States...more job losses, more wage repression, more increased trade deficit?
Wrong to Focus on China
It's wrong to focus on China in the search for the root cause of our trade deficit. Of course our deficit with China is huge; they represent on fifth of the world's population. But when expressed in per capita terms, our trade deficit in manufactured goods with China barely makes the top 20. The deficit with many other nations, most of them much more densely populated than the U.S. (as China is), is worse - some much worse, as in the case with Japan and Germany. By far, our worst trade deficit in manufactured goods, on a per capita basis, is with Ireland - 25 times worse than China.
The problem is not China. The problem is our own trade policy that fails to account for the role of population density in skewing trade results.
Pete Murphy
Author, "Five Short Blasts"
because per capita means little
It's a national economy. It doesn't matter how many people are in it when dealing with national deficits between nation states. I would think it would make it worse looking at it that way because that means China is just pouring in goods and their own domestic economy isn't soaking up and consuming as much production as they probably could.
Or look at it another way, that means it's worse for "per capita" they are 4.24 times the number of consumers we are.
But that's just not a valid metric for you're dealing with national GDPs and so on.
Besides China is clearly causing havoc with the U.S. production (domestic) economy.
Population is simply not a scale to a trade deficit, GDP, PPP sure.