 Numbers like that would sure make the rest of the world feel better about China. They might even put to rest some of the worries about a slowdown in China’s growth as the government tightens standards for bank lending.
 China’s imports climbed 100% in January, according to projections by China International Capital. Exports rose a paltry 30%, the company estimates. The official numbers on Chinese imports and exports are due out on February 10.
 In January 2009 imports slid by 43%.
 Domestic consumption of durable goods such as cars and household appliances are likely to have driven the import surge since China’s manufacturers import parts and subassemblies for those goods from Japan, Korea, and Taiwan.
It’s my job to rain on parades (and hand out umbrellas in down pours) so let me do just that here.
The first three weeks of January saw run away bank lending and easy consumer credit. The government’s tightening isn’t likely to be reflected in January trade numbers to any great extent. I don’t think we can judge how much, if at all, that tightening will slow growth from this data.
History is useful if you can see it in its entirety.
Wow. I thought this was a financial blog. Jim, what have you wrought? A lot of bone pickers here. I think most people don’t condemn China for its efforts to jump the majority of its population from the seventeenth century into the twenty-first. They just want everyone to be playing fair. In a more perfect world China would find their Adam Smith or John Locke and stop pursuing their neo-mercantilistic policies. They would stop viewing the world economy as a zero-sum game and recognize the reciprocal benefits of free trade. See Robert J. Samuelson in the May 14, 2007 issue of Newsweek.
History is important even though it may be contentious. It’s certainly used to study the stock market and investing. After all, what is technical analysis, sector seasonality, etc. but the study of history?
EdMcGon
Brazilian economists seem to have awoken to the fact that the Brazilian economy is growing faster than they thought and revised their projections of central bank rates upward from the current 8.75% to 11.25% which is closer to the 12.35% that the futures market is predicting.
From what I am seeing the PIIGS (especially Greece and Portugal) debt situation is spooking the markets and there is a flight to the dollar. The Malaysian ringgit, India’s rupee, the Euro, Indonesia’s rupiah, the Singapore Dollar, etc. all sank. The Dollar Index is up >0.5% and at its highest level since July 09. This has caused the US markets to fall. It also decreases trader’s “baked into the market” expectations for yuan appreciation.
We’ve got China over the proverbial barrel. Let them eat dollars! There’s really nothing they can do except say “yassa, massa”.
I agree with YX on length restrictions. If you want to rant, do it elsewhere. If you want to point to some relevant history, link to somewhere else and I’ll click if I feel like it. I don’t like having to use my scroll wheel so much.
I wish Jim had restricted the length of comments on his blog. Many websites do that. Reading lectures or “history” by those whose minds and eyes only half open is really WAIST OF TIME.
What I initially meant to say is that all the tough staunces from Washington towards China HURTS American companies’ BRANDS in China! The Chinese people are aware what’s going on between the two countries. American companies do have a lot of competitors in China. The Europeans, Japanese and Koreans are working very hard to capture the Chinese market.
Yesterday, I just happened saw a report about Applied Material, a quite big and well known American tech company. Guess what? The report said 2/3 of its revenue come from outside US with 25% from China! China imports a lot more things from America than you may think. I am not sure employees at AM or Boeing or farmers in America give a damn about Tibet or Ugurs or Dalai Lama. They probably just want their jobs. Yes, the world has become that way. It doesn’t pay to make 1/4 of human being your enemies.
Let me put it this way, if America drops bomb on China, which I don’t think will happen, America may well be bombing its own factories! I already heard similar saying about Taiwan and Japan. These economies now so tied up with China, any conflicts with China will hurt themselves more. That’s why the new Japanese Primary Minister proposed EU type deal for East Asian countries.
I understand some Westerners and other “rivals” of China are not used to China’s rise, but I don’t think anyone can change that. Ever since the Communists took over China, America has tried many times to “circle” China (Chinese call it “seal” China) and it’s trying even now. China has always survived and even thrived. It’s time to rethink some American’s old thinking.
Last, words to Indians. I know it must feel horrible to see China had pulled so far ahead of your country and I feel your pain. But I also want to remind you of your own glass house, when you cast that stone. You got a lot of your own issues to deals with. Tags: “Indian Muslins”, “Lower caste”, “the untouchables”.
Saurin,Thank you for your beautiful thoughts. I don’t know how long you’ve lived in the US of A, but, if you don’t know it yet, you should know that America long ago lost its moral compass and the only thing of importance here is the (once) almighty dollar.
The Chinese Han are like the Borg from Star Trek — everyone else will be assimilated. The absence of moral outcry from the world about the invasion and enslavement of Tibet is a telling sign that money and economic interests trump all.
Hang in there – there are people, even Americans, that are, like you, ashamed and disappointed in the current western world’s economic and political systems.
Don’t sweat it Seaturtlelady. It’s still dropping. The market head-faked me. You may have an even better opportunity tomorrow. Keep an eye on it.
Rats, rats, rats…transfer money hasn’t cleared yet, so no more BRF for me! I did jump in at $43.89 with a very small position a few days ago.
Good Luck EdMcGon!!
BRF update: It seems to be leveling off at $43.10. This may be a market “head fake”, although I think it could be the low, or very close to it. It’s still a good buy at this price, so hop in if you can.
BRF update: I dropped my buy-in to $42.75. The market is dropping faster than I planned.
RE: BRF
Oops! Now I know why BRF is dropping:
http://www.bloomberg.com/apps/news?pid=20601086&sid=aGfIRFP96c0c
European fears? Sounds fishy to me. How much does Brazil sell to Europe?
I think this may be a classic market over-reaction. Just checking the Wiki on Brazil, and Germany and the Netherlands made up 9.8% of Brazilian exports in 2008. We aren’t talking about Greece, Spain, etc. Even if Germany and the Netherlands cut back, how significant will that be for the Brazilian economy?
Buying opportunity folks!
sigli,
Just saw your comments. It’s ironic because I agree with many of your points (e.g., Chinese currency manipulation and subsidies). That’s what I mean when I say that the US already has important, contentious issues with China. And I think we should pursue those issues and not back off. What I question is the wisdom of supporting ethnic separatists who give little or no benefit to the US and who understandably inflame the Chinese government and people. As for not borrowing more from China, I would be happy if the US could wean itself from financing deficits through Chinese and other foreign money. But that’s our problem, not one caused by China. The basic problem, as I see it, is that Congress has no self control with government expenditures and has exercised no control over American jobs being shipped overseas. It’s as if Congress’ constituency is China and Walmart, not the American worker. With a Congress that is addicted to debt, good luck with curtailing that addiction. Heck, Congress can’t even control banking greed on Wall Street. How are they ever going to control borrowing for huge government deficits and trade deficits?
On an emerging markets note:
BRF is dropping like a rock at the opening, which is odd considering this piece of news:
http://www.bloomberg.com/apps/news?pid=20601083&sid=aoA9CLVFACDg
I’m looking at $43 as a buy-in point, although I may reduce that if BRF keeps dropping as fast as it started.
andante & Saurin,
The reason I commented about US support of the Dalai Lama and the Tibetian and Uighur separatists is because another reader (YX) commented that China is a good import market and that the US should maintain good relations with China. Both of you certainly have a different view of the Dalai Lama than I do. But the Dalai Lama is not as innocent and non-violent as you think. His supposed non-violence does not gibe with the obvious ethnic hatred that his followers recently perpetrated against innocent Chinese citizens in Tibet. That is the reality for 1/4 of the world’s population. In any event, whatever beef the Dalai Lama and Tibetians have with China is their fight, not the US’. In this era when the US already has important, contentious issues with China, it makes no sense to me for us to damage our relationship over separatist issues that have nothing to do with the US and that inflame the Chinese people, who recently saw innocent countrymen attacked and killed by ethnic separatists. If we want to do well as investors and informed citizens, it is important that we Americans be sensitive to the viewpoints of other countries and peoples, especially China. The US media constantly idolize the Dalai Lama, seldom report the ethnic violence perpetrated against Chinese in Tibet and Xinjiang, and never question the benefit to the US of appearing to support such ethnic violence. Since these issues do affect us investors, I hope that my comments will alert readers to a different viewpoint and will cause readers to think twice about the benefit to the US of supporting leaders and groups that promote ethnic separatism and violence in China.
I have comments for just about everyone, and hope to add to thought rather than being divisive.
YX–Protectionism causes a protectionist reaction. China is extrememly protectionist–currency devaluation is full-scale protectionism of every single import and export. Obama is responding extremely mildly and selectively. To give an example: China screams about US ag subsidies, but what do they do? They only allow potash imports at the lowest possible negotiated price. This is subsidizing their farm industry through power and force. They want the profits from selling to US, but are doing everything imagineable to stop US businesses from profiting in a win-win relationship. They are the only ones winning right now.
Kowloon Dave–Why not enact a law to borrow no more money from China? Listen to Arlen Specter’s question to Obama yesterday. He complained they collect our money and loan it back to us, over and over. Well, what is the obvious part we can easily control? Balance the budget and don’t borrow any more money from them. I believe it could be that simple to solve the current imbalances.
Adante and Saurin–Thank you for providing accurate details. They matter so much more than emotion.
Pulitzers are for lip service. Like B.O. won this last year for lip service, nonsustainable lip service.
Just so everyone of you know what Tibet is. I like money, I am an Indian by birth and live in the US. I love Jim’s investing strategy and read all his articles and his readers’ comments too which helps me learn about investing. Since the issue of Tibet came up I just wanted to share something off the subject but important for life. It is a bit lengthy but I hope everyone reads it & I hope the comment is allowed to be posted on this site. Thanks Saurin
If there were something civilised in man, every nation would have stood against the invasion of Tibet by China. It is the invasion of matter against consciousness. It is invasion of materialism against spiritual heights”
OSHO (Acharya Rajneesh)
Unfortunately, Tibet has fallen into a darkness. Its monasteries have been closed, its seekers of truth have been forced to work in labour camps. The only country in the world which was working — a one-pointed genius, all its intelligence in the search of one’s own interior and its treasures has been stopped by the communist invasion of Tibet.
And it is such an ugly world that nobody has objected to it. On the contrary, because China is big and powerful, even countries which are more powerful than China can ever be, like America, have accepted that Tibet belongs to China. That is sheer nonsense — just because China is powerful and everybody wants China to be on its side. Neither have the Soviets denied the claim of China aside — even India has not objected. It was such a beautiful experiment, and Tibet had no weapons to fight, they had no army to fight; they had never thought about it. Their whole thing was an introvert pilgrimage.
Nowhere has such concentrated effort been made to discover man’s being. Every family in Tibet used to give their eldest son to some monastery where he was to meditate and grow closer to awakening. It was a joy to every family that at least one of them was wholeheartedly, twenty-four hours a day, working on the inner being. They were also working but they could not give all their time; they had to create food and clothes and shelter, an in Tibet it is a difficult matter. The climate is not very helpful; to live in Tibet is a tremendous trouble. But still every family used to give their first-born child to the monastery.
There were hundreds of monasteries… and these monasteries should not be compared with any Catholic monasteries. These monasteries have no comparison in the whole world. These monasteries were concerned only with one thing — to make you aware of yourself.
Thousands of devices have been created down the centuries so that your lotus can blossom and you can find your ultimate treasure, the diamond. These are just symbolic words, but the destruction of Tibet should be known in history, particularly man becomes a little more aware and humanity a little more humane… This is the greatest calamity of the twentieth century that Tibet has fallen into the hands of materialists who don’t believe that you have anything inside you. They believe that you are only matter and your consciousness is only a by-product of matter. And all this is simply without any experience of the inner — just logical, rational philosophising.
Not a single communist in the world has meditated, but it is strange — they all deny the inner. Nobody thinks about how the outer can exist if there is no inner. They exist together, they are inseparable. And the outer is only a protection for the inner, because the inner is very delicate and soft. But the outer is accepted and the inner is denied. And even if sometimes it is accepted, the world is dominated by such dirty politicians that they use even the inner experiences for ugly ends.
Just the other day, I came to know that America is now training its soldiers in meditation so that they can fight without any nervous breakdown, without going mad, without feeling any fear so they can lie down in their ditches silently, calm and cool and collected. No meditator may have ever thought that meditation can also be used for fighting wars, but in the hands of politicians everything becomes ugly — even meditation. Now the army camps in America are teaching meditation so that their soldiers can be more calm and quiet while killing people. But I want to warn America: you are playing with fire. You don’t understand exactly what meditation will do. Your soldiers will become so calm and quiet that they will throw away their weapons and they will simply refuse to kill. A meditator cannot kill; a meditator cannot be destructive. So they are going to be surprised one day that their soldiers are no longer interested in fighting. War, violence, murder, massacre of millions of people — this is not possible if a man knows something of meditation. Then he knows the other whom he is killing. He is his brother. They all belong to the same oceanic existence.
If humanity were a little more aware, Tibet should be made free because it is the only country which has devoted almost two thousand years to doing nothing but going deeper into meditation. And it can teach the whole world something which is immensely needed.
But communist China is trying to destroy everything that has been created in two thousand years. All their devices, all their whole spiritual climate is being polluted, poisoned. But they are simple people; they cannot defend themselves. They don’t have anything to defend themselves with — no tanks, no bombs, no airplanes, no army. An innocent race which lived without any war for two thousand years… It disturbs everybody — even to reach there is a difficult task. They live on the very roof of the world. The highest mountains, eternal snow, is their home. Leave them alone! China will not lose anything, but the whole world will be benefited by their experience.
Tibet should be left as an experimental lab for man’s inner search. But not a single nation in the world has raised its voice against this ugly attack on Tibet. And China has not only attacked it, they have amalgamated it into their map. Now, on the modern Chinese map, Tibet is their territory.
And we think the world is civilised, where innocent people who are not doing any harm to anybody are simply destroyed. And with them, something of great importance to all humanity is also destroyed. If there were something civilised in man, every nation would have stood against the invasion of Tibet by China. It is the invasion of matter against consciousness. It is invasion of materialism against spiritual heights.
. . . . . . . . . . . . .
“Osho is an enlightened master who is working with all possibilities to help humanity overcome a difficult phase in developing consciousness.”
HH the XIV Dalai Lama
Andante,
thanks for the history lesson.
Can anyone point to a source that measures the extent to which the imports are of raw materials versus finished or semi-finished components (i.e., the automobile components Jim spoke of in the original post)? I.e., a ratio of raw to non-raw imports? I think January 2009 was an easy month to look good in comparison against- stimulus had not kicked in and the rest of the world was basically frozen, but your point is well taken.
kowloon dave,
With all due respect what you are saying has the tone of a PRC Tokoyo Rose. The current and 14th Dalai Lama, Tenzin Gyatso, is a symbol of nonviolence that many nonviolent groups have used to inspire them to be nonviolent. He received the Nobel Peace Prize in 1989. After the PRC invasion of Tibet in 1950 many Buddhist monks were beaten and killed. Some were forced to execute each other and monasteries were destroyed. The analogy here would be to what happened in the Nanking Massacre of 1937-8. This is documented on news reels. Tenzin Gyatso fled into exile in India in 1959 along with thousands of Tibetans. The proposed 15th Dalai Lama, Nyima, and his family disappeared in 1995. The PRC said they were taken into “protective” custody (probably similiar to what happened to the “tankman” after the Tiananmen Square protests of 1989). The PRC appointed its own Lama that no one recognizes. The Han and Uyghur conflict probably doesn’t exist because of “ethnic hatred perpetrated against innocent Chinese citizens”. Rather it probably is an economic and cultural conflict between the impoverished and poorly educated (education costs money in China) Uyghurs and the higher income, better educated and PRC backed Han who the Uyghurs see as taking over their land and cities.
To get back to Jim’s post, I think he is suggesting that the increase in imports may just be due to the front end gaming of bank lending and building of inventories using the Chinese government’s stimulus money before the government had a chance to turn it down that he discussed in another post. If true, this would make the increase in imports hard to interpret as anything more than a bump. Now that the government has cut the lending back, future numbers should show whether this import increase is persistent and therefore of more significance.
Georic
Regardless of the Dali Lama, both the tibetians and the Uigher seperatists are not our problem. Two points I would also like to add. One is seperation of church and state. Even if you would consider him a moral authority he does not belong in politics between the two countries. Second, I thought we supported democracy, the Dali Lama and how he ruled was nothing close to democracy.
If there is to be friendship between two countries, there is to be mutual respect. The Dalai Lama is a moral authority and no threat to China. If Obama was to cave in, next thing, China would ask the States to pay a tribute.
Robert,
I hope you’re right. Frankly, I’d prefer a better buying opportunity in BRF.
I’m not an expert, I have been charting for about 1 year. That said.
I use charts to do all my buys.
I just looked at EWZ, and BRF.
EWZ is solidly trapped under the 200 day on both the daily, and weekly charts, and unless it breaks above both, EWZ is going no where.
As for BRF, I see on the 15 minute chart, the 10 d and 50d moving avgs going flat, and on the daily chart, price is caught under the 200 day moving avg.
Sadly, I cant get my weekly chart to come up.
But from what i see, unless there is an outside force, BRF will be flat under the 200 day for awhile.
Any technicians have any comments ? Please
BRF update: I’m going to hold off on buying more of that until tomorrow, just to see if it will drop a little more into the $44 range (or lower). It looks like it’s going to close a hair below $45 today.
It has some room to drop if we get some negative Brazilian news (not too negative, hopefully).
I agree with YX that it generally makes sense for the US to maintain a good relationship with China. But where China is doing things that hurt the American worker or consumer, I feel that the US should take effective steps to protect its people, regardless of China’s reaction. I’m talking about things like offshoring of US jobs to China and Chinese currency manipulation that disadvantages American exporters. Of course, for years, the US Congress has failed to protect American jobs and workers, which is one reason the current Recession is so devastating and our economy is so weak. But one can still hope that the Congress will wise up before it’s too late. One things that damages the US/Chinese relationship with little or no benefit to the US is our constant pandering to the Dalai Lama and the Uighur separatists. Whatever fight the Tibetians and Uighurs have with the Chinese government should be theirs, not ours. Instead, we should be sensitive to the ethnic hatred that the separatists have recently perpetrated against innocent Chinese citizens. And yes, I include the Dalai Lama in that. He failed to condemn the anti-Chinese violence in Tibet, which was probably instigated with his knowledge and support.
Obama is thinking? I hadn’t noticed…
I see China as a major importer too, not just an exporter. That’s why US needs to maintain good relationship with China. Instead, Obama has been playing tough on China which is fullish to the best. Obama’s US is playing war game in south Asia now. I don’t know what he is thinking!
Tomorrow will be 3 days from the recommendation – I’m guessing it will be updated once Jim makes his trade.
By the way, whatever happened to the buy on BRV ETF? It is not showing on the picks list.
I hope Brazil is a big beneficiary of the increase in imports.