How Dependent is the
Chinese Economy on
Exports?
By www.ProfitableInvestingTips.com

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
Weak Chinese trade data sent
stocks down across the globe.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
According to The Wall Street
Journal U.S. stocks were hit
after the opening but pared their
losses later in the day.

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exports
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http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
The Dow Jones Industrial
Average closed little changed
Thursday, nearly recovering from
an earlier 184-point drop that
followed weak Chinese trade
data.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
Official data released Thursday
showed Chinese exports fell 10%
year-over-year last month,
sparking concerns about the
world’s second-largest economy
and global demand.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
Stocks around the globe fell and
base metals such as copper
tumbled.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
Investors moved to safe havens
such as gold, U.S. government
bonds and utility stocks.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
There are two aspects to this
news. First is that if China
exports fall it consumes fewer
raw materials, buys fewer high
tech equipment from Japan,
Germany and the U.S.A. and
consequently drives affected
stocks down across the globe.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
The second thing is that China’s
economy is slowing down
because its economic growth was
based on exponential growth of
its export market.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
But the world is only so big and
there is not a lot of room for the
Chinese export market to grow,
especially in a world that that is
still slowly recovering in fits and
starts from the Great Recession.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
Considering that China has
become a cog in the global
economic economy how
dependent is the Chinese
economy on exports and is there
a way to fix that?

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
Consumer Driven
Economic Growth

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
Japan appeared set to take over
the world economically at the end
of the 1980’s until a mountain of
bad debt came to light.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
Now a nation of savers and
exporters is into its third decade
of economic doldrums.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
China followed the Japanese
example of central planning and
selling to the world while saving
at home.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
Unfortunately China has also run
up a huge amount of debt, not so
hidden as that of Japan a quarter
of a century ago but very
worrisome.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
There is not a lot of room for
China’s exports to grow even in a
healthier world economy.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
The general consensus of
economists is that China needs
to ramp up consumer spending
and sell more within the country.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
That means letting small
businesses grow and backing off
the central state planning and
heavy industry that characterized
its early growth phase.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
Debt and a Consumer
Driven Economy

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
The Chinese drive toward a
consumer driven economy may
be hampered by excessive debt.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
The Journal notes that while
household debt as a percentage
of GDP is falling in the USA it is
rising rapidly in China.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
They believe that Chinese
consumers might soon feel the
pinch and stop spending!

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
China’s overall economic
slowdown has been cushioned by
the relative strength of consumer
spending.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
It is meant to be a virtuous
transition, in which the economy
shifts from investment in heavy
industry and infrastructure to
consumption-led growth.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
Nearly a quarter of all mortgage
debt outstanding in China was
taken out in the past 12 months.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
Peer-to-peer lenders have also
flourished, anecdotally helping
home buyers with purchase
deposits and down payments.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
The auto market, which has
boomed this year, is also
increasingly relying on finance to
fuel sales.

http://profitableinvestingtips.com/profitable-investing-tips/how-dependent-is-the-chinese-economy-on-
exports
Now the issue in China will be
how much debt consumers can
take on before they back off
spending while exports fall to
sustainable level.