Last week, news that China's economy is slowing down contributed to investor fears in world stock markets, sending equity prices lower. Not trusting Chinese GDP statistics, which have long been considered to be off target, we turned to the data that the U.S. Census Bureau reports on the value of trade between the U.S. and China to get a clearer picture of what's going on within China's economy.
Our chart below shows the exchange rate adjusted value of the year-over-year growth rate of trade between the two nations from January 1986 through November 2013, the most recent month for which that data is available at this writing:
At first glance, it would appear that China's economy is actually accelerating strongly, with China pulling in a dramatic increase of goods produced in the United States.
That first glance may be somewhat deceiving however, because the U.S. goods that China is pulling in such dramatically higher quantities are predominantly soybeans, where U.S. farmers recently harvested a record bumper crop. The unexpectedly large harvest boosted U.S. GDP in the third quarter of 2013 through its impact on U.S. inventories, and may continue to boost U.S. GDP again in the fourth quarter of 2013 in the form of increased exports.
Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.
Be the first to read Political Calculation's column. Sign up today and receive Townhall.com delivered each morning to your inbox.
Today, at 11:20 AM PT: Get the Market Movements in Advance: William's Edge Webinar for October 24th, 2014 | John Ransom
In Other News: List of "Useless Government Spending" Strangely Doesn't Include Biden's Salary | Michael Schaus
In Other News: Massachusetts School Board Moves to the Right of Democrats - Becomes Socialist | Michael Schaus
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for October 20th, 2014 | John Ransom