Special points to highlight in this issue:
* Cargo rates for the rest of the year seem to be coming down sharply ahead of the Christmas holiday, suggesting that export growth may be declining rapidly because of weaker expected demand from the US and Europe. I have no way of knowing whether or not US and Europe demand is indeed dropping, but if it is, this has important implications for the Chinese economy.
* Any reduction in China’s trade surplus must be matched with a reduction in the excess of Chinese savings over Chinese investment. While there are many ways in which either can happen, the easy ways are painful or unsustainable, and the sustainable way is politically hard to implement.
Now read on...
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