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China posts March trade surplus
The Wall Street Journal headlines the article (China Posts Surprise March Trade Surplus). But it was no surprise to us. In the March 24 American Thinker (Falling Yuan Latest Failure of Obama's Trade Policy), we pointed to scattered news reports that China was stocking up on soybeans, copper and oil in February and argued that China's trade surplus was just due to China building up foreign raw materials inventory a little earlier than usual. We wrote:
Here is the Wall Street Journal's take on why China ran a "surprise" surplus in March:
The dismal performance of imports in March suggests that "domestic demand is weakening and may revive hard landing concerns," Dariusz Kowalczyk, an economist from Credit Agricole CIB wrote in a research note. "It is also likely to convince policy makers to ease monetary policy to stimulate the domestic segment of the economy."
What nonsense! This isn't complicated. China's trade deficit in China was due to foreign raw materials inventory buildup. China's surplus in March was due to an end to foreign raw-materials inventory buildup.
Journal of Economic Literature:
Atlantic Economic Journal: