nick r: China’s data suck (including some trade data), but that’s all we’ve got. I regularly throw a 20% margin of error at whatever comes out of the NSB.

Think we will see a strengthening of the Euro as we move into summer.

Also why no trade relationships established between Brazil and China? Wouldn’t this be practical and make sense? Oil for Good?

I don’t know what to make of this report:

http://www.itulip.com/forums/showthread.php?p=90556#poststop

if one assumes the ‘consumed import value’ largely unchanged (or grows with a rate similar to GDP growth — in reality probably faster than GDP growth) and do a regression of the historical trade data, one can estimate the slope as the percentage value imported (ie the ’say 70%’ number)……this sounds like an interesting exercise to do?

The HKMA staffers provide evidence for the fact that China has become a demand-constrained economy with apparently very high secondary effects of export (not net exports) fluctuations. A bit like Japan: sentiment (business investors and consumers) seems to be quite dependent on exports (probably perceptions of expected exports. In Japan that results in a strong JPY causing widespread gloom (and real gloom as well with all those retail investors being caught once every so often with their FX losses on instruments bought to escape the yieldless domestic financial markets). Perhaps the Chinese gvt should use its considerable propaganda capacity to change this psychological feature of modern China? With so much further scope for increasing world market share (at least five years of abundant labor and rapid increases in technical efficiency, plus a lot of “sunk” foreign capital that will not want to expand anywhere else) this is one economy where sentiment should be upbeat, except among the small group of businesses that are obsolete (and happen to be in the country’s foremost development zone).

If China is unable to tackle this motivational problem, it will mean that it may continue to outcompete other countries, but for a pie that shrinks faster than when China’s domestic demand were less sensitive to this “gloom” thing, which may be appropriate in Japan and the West but is nonsensical in China. A government concerned with stability should make its citizens a little more panic resistant.

http://www.nytimes.com/2009/04/13/business/global/13yuan.html?_r=1&ref=business

HONG KONG — Reversing its role as the world’s fastest-growing buyer of United States Treasuries and other foreign bonds, the Chinese government actually sold bonds heavily in January and February before resuming purchases in March, according to data released during the weekend by China’s central bank.

China’s foreign reserves grew in the first quarter of this year at the slowest pace in nearly eight years, edging up $7.7 billion, compared with a record increase of $153.9 billion in the same quarter last year.

China has lent vast sums to the United States — roughly two-thirds of the central bank’s $1.95 trillion in foreign reserves are believed to be in American securities. But the Chinese government now finances a dwindling percentage of new American mortgages and government borrowing.

In the last two months, Premier Wen Jiabao and other Chinese officials have expressed growing nervousness about their country’s huge exposure to America’s financial well-being.

Chinese reserves fell a record $32.6 billion in January and $1.4 billion more in February before rising $41.7 billion in March, according to figures released by the People’s Bank over the weekend.

http://www.bloomberg.com/apps/news?pid=20601087&sid=azo6VdjXJ7RY&refer=home

April 12 (Bloomberg) — China plans to create a $10 billion investment cooperation fund and offer $15 billion in credit to its Southeast Asian neighbors, extending its influence as the region attempts to weather the global financial crisis.

The investment fund will promote infrastructure development linking China with the 10 members of the Association of Southeast Asian Nations.

The measures from the world’s third-largest economy, and one of the few forecast to maintain growth this year, may help speed recovery from the global financial crisis and cement China’s leadership in the region. The nation has already signed currency swap agreements with Indonesia, South Korea, Hong Kong and Malaysia this year to help ease foreign-exchange shortages and aid bilateral trade and investment.

“China is going to take the opportunity of this crisis to further establish itself in Asia,” said Huang Jing, a visiting professor at the National University of Singapore’s Lee Kuan Yew School of Public Policy. “All this will have a huge political and diplomatic impact in the region, in addition to the economic impact.”

Other planned measures include 270 million yuan ($39.5 million) in aid to Cambodia, Laos and Myanmar, and donation of 300,000 tons of rice to an emergency East Asia rice reserve to boost food security, the statement said.

China’s proposals give Asean countries “another option” besides going to the International Monetary Fund or the Asian Development Bank for funding, Huang said. That may aid China’s standing with Asean, where memories are still fresh of the painful conditions imposed by the IMF in exchange for rescue packages during the 1997-98 Asian financial crisis, according to Huang.

“Southeast Asian countries will welcome the proposal,” he said.

here is another paper on china economic issues

http://pragcap.com/is-china-dependent-on-the-the-us

One of the interesting chart is chart 3 which uses volume instead of price to measure import and export growth, IMO taking out distortion caused by rapid rise and fall of the prices in commodities.