Exports and Imports

Sept. 11, 2012
China’s changed outlook

China’s rate of growth is slowing.  First quarter GDP growth stood at 8.1%; second quarter GDP growth was 7.6%.  A continuation of the current trend will make it next to impossible for China to hit its growth target of 7.5%.  The Chinese leadership has announced dozens of new infrastructure projects in the hopes of stimulating the economy.  This has worked in the past in combination with robust global investment.  It will be interesting to see if the stimulus without foreign investment approach can work this time. 

The problems are dual in nature.  Exports account for about one quarter of GDP and the growth rate in exports has fallen from year-over-year growth rates of 11.3% in June to about 1.0% in July.  Internal consumption has also fallen off as evidenced by a decline in imports. 

I have no doubt that China will overcome this short-term problem, especially as the US and Europe experience increased economic activity in 2013.

What the current situation shows is the foolishness of previous straight line forecasting.  Do you remember forecasts from just a few years ago that said China was unstoppable?  How about the dire predictions of how China would be larger than the US by the middle of this decade?  The reality is that near-sourcing, productivity enhancements, and cost realignments are all working in favor of the US and that a positive view of the future here is well placed.   

About the Author

Alan Beaulieu Blog | President

One of the country’s most informed economists, Alan Beaulieu is a principal of the ITR Economics where he serves as President. ITR predicts future economic trends with 94.7% accuracy rate and 60 years of correct calls. In his keynotes, Alan delivers clear, comprehensive action plans and tools for capitalizing on business cycle fluctuations and outperforming your competition--whether the economy is moving up, down, or in a recession.

Since 1990, he has been consulting with companies throughout the US, Europe, and Asia on how to forecast, plan, and increase their profits based on business cycle trend analysis. Alan is also the Senior Economic Advisor to NAW, Contributing Editor for INDUSTRYWEEK, and the Chief Economist for HARDI.

Alan is co-author, along with his brother Brian, of the book MAKE YOUR MOVE, and has written numerous articles on economic analysis. He makes up to 150 appearances each year, and his keynotes and seminars have helped thousands of business owners and executives capitalize on emerging trends. 

Prior to joining ITR Economics, Alan was a principal in a steel fabrication company and also in a software development company.

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