EUROPE’S CONTAGION INTO CHINA….
Much has been made in recent weeks about the Eurozone troubles and the spillover into China. It’s nice to put things into context in order to understand the global effect here and see just how much the European weakness is hurting China. US Funds recently posted a nice summary of the impact. As you can see, Europe makes up China’s largest trade partner contrary to the belief that the USA is China’s largest trade partner. Clearly, the impact is being felt. Here’s more via US Funds:
“Today, the J.P. Morgan Global PMI for May came in lower at 50.6—just above the level indicating expansion—and China’s HSBC Manufacturing PMI fell to 48.4. Both numbers were below their respective three-month moving averages. Historically, we’ve seen China’s PMI number leading the year-over-year change in exports by three to four months, so when the PMI has increased, a few months later, Chinese exports have historically risen, and vice versa.
China’s HSBC PMI tends to be more reflective of export demand, as it is compiled by private parties, covers a smaller survey sample and is weighted toward smaller businesses. Therefore, a lower PMI number indicates lower export demand.
With Europe’s growth in a deep freeze, China is feeling the pain. While many think the U.S. is receiving most of the Chinese-made goods, Europe is actually China’s largest export partner. Nearly 22 percent of China’s exports head to Europe, contributing nearly 6 percent to China’s GDP; only 17 percent of exports from China are shipped to the U.S.”
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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7 Comments
The obvious question to then ask is If Europe is Chinas largest custome and is being hurt by same then who is the US largest customer? and will they be hurt by the second order relationships.
Canada, duh.
Let me rephrase that.Who is the largest export customer of the US and who is the the export customer who has been responsible for growth in US exports post GFC?
As a Brit (duh) I do not know this info.
It’s rather clear than Cullen, a person I esteem a lot, is in denial. He knows everything about US monetary system but much less about everything east of the Urals and west of California. Pettis, Chauvanec and Xie are better (by far) sources if you like to know something about what happening to economies that represent 2/3 of the world population. Zulauf also has something interesting to say.
What’s your beef with the post? All he did was post somebody else’s factual statistics? Don’t even believe there’s a single opinion up there that warrants him being “ignorant” to whatever reality you’re pointing out??
As I wrote before I respect Cullen a LOT. He helped me comprehend some stuff I’ve completely ignored at my own peril. I’ve reduced the number of blogs I read because there’s so little beef around and so much noise. Not this one, which is also quite tolerant to posts like mine. BUT, and is a big BUT, there is too little coverage about Asia and most from dubious sources. Fine, the giant is still a baby one, but what’s really happening there is poorly covered and because this is an otherwise good information source with interesting comments also, it needs some better beef. May be I could have written this more politely.
myth busters…………