Mujraparty
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WASHINGTON A weakening Chinese economy, underlined by a further slowdown disclosed on Friday in Beijing, is starting to pose a headache for United States officials and the two presidential campaigns, as Chinese companies shift toward a greater reliance on selling to the American market.
A real estate bust in China and sweeping layoffs in the countrys construction sector, together with slower growth in retail sales and declining exports to Europe, have left one area that is thriving: exports to the United States.
But the result is a swelling American trade deficit with China in an election year. The bilateral deficit widened 10.2 percent in the first five months of this year compared with the gap in the period a year earlier, and preliminary data suggest that it widened further in June.
The deficit could swell even more as November approaches. The weakness of the Chinese economy is holding down its demand for American exports, even as Chinese exporters show a laserlike focus on selling to the American market.
The Obama administration has stayed silent about the Chinese export surge to the United States because it does not appear to stem from an explicit policy drafted in Beijing. The American market has become more appealing for many companies in China because of slowing demand in their home market and from Europe, as opposed to government subsidies or other policies.
But a call by Chinas premier, Wen Jiabao, on Tuesday for increased investment spending has stirred some concern in Washington. American officials had been pressing China to expand consumption instead of building ever more factories that could someday produce even more exports.
I think its worrisome because if China is going to do its tried and tested way of responding to an economic slowdown by increasing investment, it just sets the stage in the future for increased trade frictions, said an American trade official who spoke on the condition of anonymity because of diplomatic sensitivities.
Exporters like the Shenzhen Ezoneda Technology Company, a manufacturer of electrical extension cords and computer cables in southeastern China, are finding an attractive market in the United States and are becoming better able to supply it. After struggling as recently as late winter to recruit enough workers, exporters are now able to run assembly lines flat out as companies supplying the domestic Chinese market lay off workers or slow their hiring.
It is easier to find workers now than in February, it is easier to find workers this year compared to last year, said Nick Tan, the sales manager at Shenzhen Ezoneda.
At the same time, slumping demand for steel and other commodities by construction companies and other businesses supplying the Chinese domestic economy has made it cheaper for exporters like Shenzhen Ezoneda to buy materials.
China announced on Friday that its economy grew at an annual rate of 7.6 percent in the second quarter, down from 9.5 percent in the period a year earlier. It was the sixth consecutive quarter of falling growth and the weakest officially acknowledged growth rate since the first quarter of 2009, at the bottom of the global financial crisis.
But the Chinese government also said on Friday that nationwide electricity production actually dropped 0.9 percent in June from a year earlier. That could be a sign of a much deeper slowdown. Lombard Street Research in London estimated Chinas annualized growth rate during the second quarter at a little less than 4 percent.
The Obama administration portrays its China policies as a success over the last three and a half years, pointing to a 7.2 percent appreciation in the renminbi against the dollar since President Obama took office. This has made Chinese exports costlier in the United States and American goods more affordable in China.
Add in faster inflation in China than in the United States over most of this period and the renminbis real appreciation was 10.2 percent through May.
But the renminbi has slipped 1 percent against the dollar from its peak on May 2. The difference in inflation rates has also reversed in recent months, with producer prices in China down 2.1 percent in June from a year ago, even as they rose 0.1 percent in the United States.
The administration has stayed silent during the renminbis modest retreat, not least because there is little evidence that the Chinese government has played much role in it. The renminbi has fallen less against the dollar than most emerging-market currencies in recent weeks.
Chinese companies have been slower in recent months to convert the dollar receipts from their exports back into renminbi, reducing demand for the Chinese currency. The renminbi has seemed less likely to appreciate and many companies are seeking ways to diversify their operations and investments overseas.
Chinas central bank has actually been restraining what would otherwise be a faster fall in the renminbi. It has done so by frequently pegging the start of each days trading at a stronger level against the dollar than the close of the previous days trading.
Chinese economic weakness, coupled with rising exports, poses challenges for presidential campaigns. Mitt Romney, the presumptive Republican presidential nominee, has portrayed China as an economic powerhouse that bends trade rules and has called for labeling China as a currency manipulator and challenging it on trade policies from his first day in office.
Asked about the latest signs of economic weakness in China, Andrea Saul, a spokeswoman for the Romney campaign, responded in a statement on Friday that, Regardless of Chinas economic performance, Governor Romney will insist from Day 1 that they put an end to their intellectual property theft, market restrictions and currency manipulation.
The Obama administration faces constant pressure from labor unions to take a more confrontational stance toward China on trade. But the unions, generally supportive of his re-election bid, have stayed largely quiet in recent weeks.
http://www.nytimes.com/2012/07/14/b...o-us-surge-as-the-domestic-economy-cools.html
A real estate bust in China and sweeping layoffs in the countrys construction sector, together with slower growth in retail sales and declining exports to Europe, have left one area that is thriving: exports to the United States.
But the result is a swelling American trade deficit with China in an election year. The bilateral deficit widened 10.2 percent in the first five months of this year compared with the gap in the period a year earlier, and preliminary data suggest that it widened further in June.
The deficit could swell even more as November approaches. The weakness of the Chinese economy is holding down its demand for American exports, even as Chinese exporters show a laserlike focus on selling to the American market.
The Obama administration has stayed silent about the Chinese export surge to the United States because it does not appear to stem from an explicit policy drafted in Beijing. The American market has become more appealing for many companies in China because of slowing demand in their home market and from Europe, as opposed to government subsidies or other policies.
But a call by Chinas premier, Wen Jiabao, on Tuesday for increased investment spending has stirred some concern in Washington. American officials had been pressing China to expand consumption instead of building ever more factories that could someday produce even more exports.
I think its worrisome because if China is going to do its tried and tested way of responding to an economic slowdown by increasing investment, it just sets the stage in the future for increased trade frictions, said an American trade official who spoke on the condition of anonymity because of diplomatic sensitivities.
Exporters like the Shenzhen Ezoneda Technology Company, a manufacturer of electrical extension cords and computer cables in southeastern China, are finding an attractive market in the United States and are becoming better able to supply it. After struggling as recently as late winter to recruit enough workers, exporters are now able to run assembly lines flat out as companies supplying the domestic Chinese market lay off workers or slow their hiring.
It is easier to find workers now than in February, it is easier to find workers this year compared to last year, said Nick Tan, the sales manager at Shenzhen Ezoneda.
At the same time, slumping demand for steel and other commodities by construction companies and other businesses supplying the Chinese domestic economy has made it cheaper for exporters like Shenzhen Ezoneda to buy materials.
China announced on Friday that its economy grew at an annual rate of 7.6 percent in the second quarter, down from 9.5 percent in the period a year earlier. It was the sixth consecutive quarter of falling growth and the weakest officially acknowledged growth rate since the first quarter of 2009, at the bottom of the global financial crisis.
But the Chinese government also said on Friday that nationwide electricity production actually dropped 0.9 percent in June from a year earlier. That could be a sign of a much deeper slowdown. Lombard Street Research in London estimated Chinas annualized growth rate during the second quarter at a little less than 4 percent.
The Obama administration portrays its China policies as a success over the last three and a half years, pointing to a 7.2 percent appreciation in the renminbi against the dollar since President Obama took office. This has made Chinese exports costlier in the United States and American goods more affordable in China.
Add in faster inflation in China than in the United States over most of this period and the renminbis real appreciation was 10.2 percent through May.
But the renminbi has slipped 1 percent against the dollar from its peak on May 2. The difference in inflation rates has also reversed in recent months, with producer prices in China down 2.1 percent in June from a year ago, even as they rose 0.1 percent in the United States.
The administration has stayed silent during the renminbis modest retreat, not least because there is little evidence that the Chinese government has played much role in it. The renminbi has fallen less against the dollar than most emerging-market currencies in recent weeks.
Chinese companies have been slower in recent months to convert the dollar receipts from their exports back into renminbi, reducing demand for the Chinese currency. The renminbi has seemed less likely to appreciate and many companies are seeking ways to diversify their operations and investments overseas.
Chinas central bank has actually been restraining what would otherwise be a faster fall in the renminbi. It has done so by frequently pegging the start of each days trading at a stronger level against the dollar than the close of the previous days trading.
Chinese economic weakness, coupled with rising exports, poses challenges for presidential campaigns. Mitt Romney, the presumptive Republican presidential nominee, has portrayed China as an economic powerhouse that bends trade rules and has called for labeling China as a currency manipulator and challenging it on trade policies from his first day in office.
Asked about the latest signs of economic weakness in China, Andrea Saul, a spokeswoman for the Romney campaign, responded in a statement on Friday that, Regardless of Chinas economic performance, Governor Romney will insist from Day 1 that they put an end to their intellectual property theft, market restrictions and currency manipulation.
The Obama administration faces constant pressure from labor unions to take a more confrontational stance toward China on trade. But the unions, generally supportive of his re-election bid, have stayed largely quiet in recent weeks.
http://www.nytimes.com/2012/07/14/b...o-us-surge-as-the-domestic-economy-cools.html
