A long decline in growth since 2010
Stronger exports could also mean that a long drought in demand from the world’s developed economies, in particular the U.S., is finally ending. That would be good news for China and Asia’s other export-dependent economies.
But if the recovery is driven by a single product, even one as groovy as the iPhone 6, it could be the statistical equivalent of a butt-dial – a one-off.
Economists are so far offering varying explanations for the sudden uptick. One is that, hallelujah, the U.S. consumer is back, a theory supported by the fact that China’s exports to the United States rose by 11% in the third quarter, the fastest pace since mid-2012, and that overall U.S. imports appear to be slowly recovering after a long decline in growth since 2010.
Another explanation is that the surge in Chinese exports represents a revival of a once-popular method of smuggling cash into China’s otherwise closed financial borders by over-invoicing exports. If a company sells a $100 widget, but tells customs it charged $200, it can sneak the extra $100 past China’s monetary watchdogs.
China cracked down on this tactic in May last year, and it seemed to be working. But a 33% increase in September exports from China to Hong Kong has some economists wondering if the practice might be back in vogue. That could suggest renewed optimism for China’s economy and its currency amid concerns about global growth – also not entirely bad news for China.