Container data highlights China trade slowdown, impact of debt crisis in Europe

CONTAINER volumes from China show marked falls in exports to the western Mediterranean region, although, the throughput of boxes from the mainland China to north Europe continued to grow marginally in the first half of 2012 compared with the corresponding period last year.

Statistics from the UK-based consultancy Container Trade Statistics show that while Chinese exports are still rising, the rate of growth has plunged according to Lloyd's Loading List.com.

China's exports in July were up one per cent from a year earlier, far lower than the 11.3 per cent growth seen in June. Imports rose 4.7 per cent compared with 6.3 per cent in June, which indicates declining growth in domestic demand, with data on retail sales offering further confirmation on this point.

The trade figures were the worst since November 2009, and were unveiled just a day after China reported that growth in industrial output fell to a three-year low in July.

In addition, the statistics show that East China exported 1.48 million TEU to Europe from January to June this year, compared to 1.44 million TEU over the same period in 2011. The figures for Southern China are 940,000 TEU for 2012 and 935,000 TEU for 2011 and for Northern China, 588,000 TEU compared to 568,000 TEU for the previous year.

But separate figures for the western Mediterranean highlight the very real impact of the eurozone crisis, with a fall from 104,000 TEU in the first six months last year to 95,000 in the first six months of this year.

Container Trade Statistics managing director Rod Riseborough said: "There is obviously a major decline in the western Mediterranean and I would suspect it is closely aligned to the euro issue."

Shayne Heffernan, founder of Thailand-based Heffernan Capital Management, explained that the Chinese government cannot properly be depicted as the master of its own fate. "Everybody is expecting China stimulus but for me the real question is: even if that stimulus comes, what will it do? Exports to Europe and the US are slowing and everyone is of the opinion that Europe's problems are not solved."

Debt levels in Greece and Spain remain critical, Mr Heffernan believes, and European businesses are not investing and consumers are not spending, and that can only have a detrimental impact on China's export efforts. The risk of obvious moves such as relaxing credit or allowing currency depreciation is that this will simply generate internal inflation rather than have the desired effect, he said. Another potential consequence is fresh unemployment and social unrest as the ruling Communist Party attempts to hand power over to a new generation of leaders.