The great wobble
The world’s second-largest economy continues to limp along, as China reported this week that both its imports and exports fell in August. The country, often hailed as the “factory of the world”, reported that exports were down 8.8% year-on-year, the fourth consecutive month of decline.
The news adds to the uneasy feeling that China’s economy is wobbling. Growth has slowed to an anemic quarterly figure of +0.8%, consumer demand remains tepid, factory activity has recorded 5 consecutive months of contraction, the country’s property market is in a slump, and youth unemployment has surged to such alarming levels that the government has ceased reporting the figures. Some analysts are even suggesting that China’s economy may never eclipse that of the United States — a changing of the guard that seemed inevitable just a few years ago.
Made in Mexico
Meanwhile, talking about changes of the guard, China’s malaise has come at the benefit of the US’s southern neighbor. Indeed, Mexico, like its popular pilsner Modelo Especial, has become America’s preferred choice, accounting for 16% of US imports over the past 3 months, up from ~12% a decade ago.
The silver lining for the Chinese economy is its burgeoning electric vehicle industry — car exports have surged by over 100% during the January to August period, largely thanks to the rapid growth of BYD.
