China’s Exports Collapse by 18.1%

SHNGHI-M 1-25-2014

I have warned that China’s exports were an illusion and that there was a huge carry trade borrowing dollars in Hong Kong at 1% and depositing the money in China getting 6%. But trade tracks money, not goods, so the illusion that China was still expanding was a good one – but still just an illusion.

China’s exports have plummeted “unexpectedly” in February among the tradition forecasters that use the numbers and believe in them. Compared to last year, according to official figures, exports fell by 18.1% from last year. Economists polled by Reuters had expected a gain of 6.8% for the second largest economy in the world. This demonstrates just how out of touch the mainstream economic community really is these days.

In China, many factories were closed. Imports in February rose by 10.1%, also more than expected. Then there has been the first important corporate bankruptcy in China. It is feared that more companies could follow as managing skills in how to survive a economic decline in China is seriously lacking.

Our projection for the low in China’s economy REMAINS the target year 2020. This is why the last bastion for capital remains the US dollar and the greatest recipient of capital is still the US share market. The widening scope of the rally has led the S&P 500 to take the lead away from the Dow Jones Industrials showing the trend is filtering outside of the big institutional money.