The name of the game is maintaining a deficit with suppliers of essential commodities while flooding the world with its own manufactures, whether other nations like it or not. The supply side will continue at full throttle to keep unemployment at bay.
Source China Customs
According to Xinhua, the main agenda of the third plenum will focus on further deepening reforms and promoting the modernization of China. These umbrella terms provide little insight, and it is likely that the agenda will only serve to reinforce Xi Jinping’s own vision. As for trade,
In terms of exports,
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We expect a strategy of boosting exports and maintaining surpluses at all-time highs.
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Export controls, to gain leverage or counteract the actions of others, will not be unusual.
Regarding imports,
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China will intensify efforts to ensure access to the commodities it needs, from energy or minerals to agricultural products.
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The consumption upgrade that was heavily promoted years ago will be disregarded. If anything, China will prompt exporters abroad to establish manufacturing operations in China to access the domestic market and also export from China.
Overall, China will try to settle in yuan as much as possible of its international trade, whether with Russia, Brazil, Saudi Arabia, or others.
All of the above, properly dressed in a narrative of multilateralism and goodwill towards the so-called global south.
It is just speculation on our part, but following the Third Plenum, we anticipate a devaluation of the yuan similar to what occurred in August 2015.
The Q1 2024 reading shows it is 1.5 percentage points below the 2023 average.
The reading for the auto industry was 64.9%, nearly nine percentage points below the total industry average and down 7% compared with the same quarter a year ago
ratio of actual output to production capacity (source NBS)
In Q1 2024, imports of cheap ($0.76 per liter) bulk wines represented nearly 50% of total imports by volume, up from 38% a year earlier. Chile supplies 90% of the bulk wine at the astounding CIF price of $0.7 per liter.
Imports of bottled wine further drop; 9% by volume and, even more worryingly, 13% by value.
Hopefully, this will boost trade. It has been confined to a narrow band for the last ten years with barely any growth.
Source INTRACEN
Lula da Silva won the Brazilian elections in the last quarter of 2022, prompting China to prepare a nice gift to be delivered as soon as he entered office in January 2023: a gift valued at $4 billion in 2023, which will increase to $6 billion this year. The approval of corn imports from Brazil took place by the end of 2022, with Lula visiting Xi in April 2023.
Source China Customs
China has published its new Customs Law, which will come into effect on December 1, 2024.
Our cursory look (not that of a true lawyer) shows that the competencies of the Customs Tariffs Commission under the State Council have been expanded to include the imposition of anti-dumping duties, countervailing duties, and safeguard tariffs
The week of May 5 marks Xi Jinping’s visit to Serbia. Regarding trade the visit is irrelevant.
The top 3 trading partners of Serbia are the EU, China, and Russia. However, the trade with the EU dwarfs the others. In the case of China, the mutual trade EU-Serbia outperforms China-Serbia by 7 to1.
Additionally, despite the brouhaha of a free trade agreement between China and Serbia, the only interest of China from this country in the Balkans is copper ores and concentrates. Copper accounted for 34% of China imports from Serbia three years ago, it will be 77% in 2024. Imagine.
The visit must have other objectives, of more political nature rather than trade. Belt and Road, BRICS membership, Beijing-Moscow-Belgrade friendship, NATO, etc., but surely, not trade.
The preferred outpost of China in the EU; however, exports peaked in 2022. Batteries accounted for 6% of China’s total exports to Hungary that year, but this percentage has dropped since then.
Source China Customs
After the monthly PMI data is released, a senior statistician from the Stats Agency analyzes it. They consistently skip talking about the employment sub-index.
The magnitude of the increase is relatively modest but consistent; to some extent is a bit surprising.
Source Shanghai Shipping Exchange
On April 22, Mexico increased tariffs on about 500 products, including steel, aluminium, textiles, apparel, and others
While the immediate thought is that the decree will primarily affect China, we believe that foreign trade promotion programs in place in Mexico, such as the import-duty deferral program (IMMEX), will encourage more Chinese companies to set up manufacturing shops in Mexico. If we are correct, the new tariffs will not affect imports under the IMMEX program.
The French carrier CMA CGM just announced it will launch the M2X service. A service from Tianjin to Lazaro Cardenas (the largest Mexico seaport) specifically designed to streamline shipments from China to Mexico
Source China Customs
In 2023, China exported approximately $1.5 billion worth of seafood to the EU. Actually, more than two-thirds of the fish exported had previously been sent to China for cleaning, cutting, and packaging in trays before being sold in EU supermarkets
In August 2023, China established export restrictions on various items doped with or containing gallium and germanium.
One item experienced a 9% drop in volume while its price increased by 21% compared with Q1 2023.
Source China Customs
The size of China’s imports from Norway depends heavily on China’s crude oil imports from the Nordic country. The correlation is almost perfect. During the last few years, Norwegians embraced a purchasing frenzy of e-cars made in China, which they exchanged for crude oil shipped to the Middle Kingdom. Now, Norway has shifted its import frenzy from China to electric buses.
China’s Golden Week travel abroad doubles in May, according to bookings on Fliggy, the Alibaba online travel platform. Regional travel drives the 100% year-on-year growth, with destinations such as Japan, Thailand, and South Korea leading the way. For long-haul trips, Brazil and Turkey seem to top the list.
Chinese tabloids commend the notable rise in Communist Youth League (CYL) membership. From the absolute figures they provide, our calculations based on current age cohorts in China would suggest that nearly 40% of eligible citizens aged 14-28 are CYL members.
Playing with the figures would also suggest that during Xi Jinping’s time in office, the Communist Youth League (CYL) doubled its membership. This is somewhat curious because, if we are not mistaken, the entirety of CYL members now belong to Generation Z. They are often referred to as 躺平, or ‘lying flat’.
Perhaps the Party adopted as a goal to pursue the title of Meat Loaf song, Two Out of Three Ain’t Bad. Just saying.
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