China is the second largest economy in the world and 180 million people or one third of its workers are tied to the trade sector. If you have shopped in a retail environment either on line or in a store, many of the items are made in China. As trade goes so does the Chinese economy.
In an article by Reuters, overseas shipments in May fell 3.3% after a 3.5% gain in April. The economists polled by Reuters expected a 7% drop. Imports were off 16.7% compared to a year ago, the previous month saw a 14.2% drop. Reuters economists expected a 9.7% drop.
Wang Jun, chief economist at Zhongyan Bank explained exports benefited from the ASEAN market and exchange rate depreciation while imports were affected by low domestic demand and lower commodity prices.
China had a $62.93 billion trade surplus, compared to Reuters’s poll forecast of $39 billion and $45.34 billion surplus in April. China’s trade surplus with the US widened to $27.89 billion.
President Trump may talk about lowering the trade numbers with China but reality is a little different.
Given the COVID demand for medical supplies, China shipped $12 billion worth of medical supplies, Reuters calculations from customs data showed.
Linking to dividend paying stocks, politicians make announcements, but that does not necessarily translate into reality. Most supply systems are more complicated and not easily changed, it was estimated it takes a couple of years to make changes and by that time something better can be found or it is complicated. The reality is larger organizations can deal with the changes, even though they are not as nimble as they think they are, but generally they have larger resources to ensure changes can be made and profits to continually roll in. As an investor you like the extra resources to make changes.
There are more questions than answers, till the next time – to raising questions.