China and the United States more than ever bound by their economies

China’s trade surplus reached a high record on February 2015, reflecting the improvement in demand for its major partners and the fall of oil prices, but also the slowdown in domestic consumption.

The surplus of foreign trade of the “workshop of the world” has reached $ 60.6 billion (55.8 billion €) in the second month of the year, according to published data, on Sunday, March 8th, by Chinese customs.

China’s exports surged 48.9% in February compared to the same month last year, reaching $ 169 billion, and that while they had suffered a contraction of 3.2% in January.

Calendar Effect

This increase is primarily related to the calendar. The Lunar New Year occurred on February 19th this year, so that Chinese factories have strongly worked upstream of the week off, during which the economy slows down, while the festival was held in late January the last year.

Even despite this basic fact, sales of China to the world made real progress: they earn 15% in the months of January and February combined. The recovery in America is a major source of demand, China’s shipments to the US rising by 21% over the first two months of the year. They earn 13% to Europe.

Because China’s imports fell down by 20.5% in February, over a year, continuing the 19.9% drop recorded in January. The lower price of oil in recent months is an important explanatory factor but not the only one.

China plans a declining growth in 2015

CroissanceChinese domestic demand is actually affected by the slowdown in growth. Having found an increase of 7.4% of gross domestic product (GDP) of the first economy in the world throughout 2014, below the established goal, Chinese leaders announced Thursday 5th March they were aiming for around 7% of growth for the Chinese economy in 2015 according to the text of a speech by Prime Minister Li Keqiang consulted by the AFP, a widely expected decision amid worsening economic situation in the country.

Among the objectives presented at the annual session of the National People’s Congress, Li Keqiang, also said China expected a 6% growth in foreign trade this year.

The government also lowered to “around 3%”, against 3.5% last year, its target level of inflation for 2015, while the second world economy is facing intense deflationary pressures fueled by national demand deeply slowed. These objectives were announced earlier by the official Xinhua news agency.

Hard times

Under the red star of the Grand People’s Palace before an audience of nearly 3,000 officials, the head of government barely recognized to be employed in the opening of the annual session of the Assembly oils the Communist Party, which times are proving more difficult than expected.

Problems deeply rooted in the economic development of the country become more obvious. The challenges we face this year could be larger than last year, “said Mr Li He also found.” The road to global recovery was grueling, made many ups and downs, and performance major economies have diverged.

Consequently, the world’s leading exporter is also less ambitious in the progression of his trade, planned to rise from 6% in 2015. The volume of China’s trade with the rest of the world had gained 3.4 % last year, while the stated goal was to grow by 7%.

Roadmap

Faced with this reality, the Chinese government intends to demonstrate that it has a clear roadmap. Li Keqiang now evokes a “Twin” growth, in reference to the traditional growth pillar aka public spending, which must be completed by the People’s entrepreneurship. He promises to modernize the first area gradually switching from massive investment in infrastructure to more public services to the person.

As for private sector, Li promises to reduce the areas in which the state restricts investments. It promises to leave more space for private banks, at a time when web giants like Tencent and Alibaba already offer online services competing with traditional state banks. He also announced the forthcoming enlargement at the Shenzhen Stock Exchange, second in mainland China, of a program opened last fall allowing investors based in Shanghai to invest in shares listed on the place opened to international such as Hong Kong.

After creating a so-called free trade area in the east of Shanghai, Li Keqiang also confirms, without a date, the creation of three new similar areas in the provinces of Guangdong and Fujian (southeast) and in the city of Tianjin. The results of the Shanghai area, opened in autumn 2013, remains very mixed. A poll released Wednesday by the US Chamber of Commerce in China shows that 73% of US companies find “no concrete benefits” to the area.

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