January 14, 2025 • 11 mins
We unpack China's new trade data & discuss concerning new developments in Taiwan tensions
China Update provides listeners with the most up to date political, economic, and geostrategic analysis on China - so that you are on top of the world's number 2 economy. These podcasts are based on hundreds of articles, think tank reports, government statements and other resources in English and Chinese every week. The views and analysis are all my own and I produce the podcasts.
My Patreon: https://www.patreon.com/chinaupdate
Disclaimer: China Update is not a financial advisory channel. While I take great care in researching everything discussed in these podcasts, nothing I say should be taken as investment advice. Please speak to a professional before making any investment decisions. #China
China Update provides listeners with the most up to date political, economic, and geostrategic analysis on China - so that you are on top of the world's number 2 economy. These podcasts are based on hundreds of articles, think tank reports, government statements and other resources in English and Chinese every week. The views and analysis are all my own and I produce the podcasts.
My Patreon: https://www.patreon.com/chinaupdate
Disclaimer: China Update is not a financial advisory channel. While I take great care in researching everything discussed in these podcasts, nothing I say should be taken as investment advice. Please speak to a professional before making any investment decisions. #China
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Happy Tuesday, everybody. Welcome to another episode of China Update,
where I provide you with the most up to date political, economic,
and geostrategic analysis on the world's number two economy. My
name is Tony. Let's jump in and we begin as
we usually do, with the economy. Yesterday Monday saw the
release of China's trade data. Now, unlike other official numbers
(00:20):
published by Beijing, these are typically very accurate as they
can be verified with trading partners. On the face of it,
the numbers look excellent, great news for China, taking some
pressure of policymakers. However, as we will see, the devil
is very much in the details and the situation is
not as good as it looks. China's trade data in
(00:41):
December bed expectations by a large margin, with exporters continuing
to frontload shipments as concern over additional tariff's mount Exports
in December jump to ten point seven percent in US
dollar terms from a year earlier, beating expectations of a
seven point three percent growth in a UK based Reuter's
poll up economists. It compares with six point seven percent
growth in November and a spike of twelve point seven
(01:02):
percent in October. In December, shipments to most markets climbed
with double digit increases to the Association of Southeast Asian
Nations and the US, where exports grew eighteen point nine
percent and fifteen point six percent, respectively from a year earlier. Interestingly,
Vietnam overtook Japan as China's third largest export destination for
the first time. China's exports to Vietnam in twenty twenty
(01:23):
four rose almost eighteen percent to a record one hundred
and sixty two billion US dollars that surpasses the one
hundred and fifty two billion in shipments to Japan, previously
the third largest market for Chinese exports. The reason for
the shift is likely that many Chinese manufacturers are moving
their operations to Vietnam in the hope that they can
avoid future terraces from the US and others against China.
(01:44):
Now that is on the export side, the import side
is a far less rosy picture. Customs data also showed
imports roads just one percent last month from a year earlier,
reversing from the contraction in the previous two months. That
compares with a bigger drop of three point nine percent
in November and two point three percent in October. With
these data, China's trade surplus with the rest of the
(02:07):
world reached a record of almost one trillion US dollars
in twenty twenty four, specifically nine hundred and ninety two
billion US dollars. Now, this is pretty incredible, as the
US based New York Times rights quote, when adjusted for inflation,
China's trade surplus last year far exceeded any in the
world in the past century, even those of export powerhouses
(02:29):
like Germany, Japan, or the United States. Chinese factories are
dominating global manufacturing on a scale not experienced by any
country since the United States after World War II end quote. Now,
some commentators will point to this performance and say, look,
China is seeing one trillion in trade surplus, how can
you say the Chinese economy is in a bad state.
(02:51):
To this observation, there are three points to be made. One,
most analysts acknowledge that China's trade numbers represent a rare
bright spot for the ACA economy, with the rest of
the economy experiencing varying degrees of poor performance. Two, Having
all your proverbial eggs in one growth basket is risky
at the best of times, but is especially dangerous for China.
(03:13):
In this environment, China's sole growth engine of significance is
currently exports. Of China's nine hundred ninety two billion US
dollars of trade surplus, more than a third was with
the United States. And this news comes just one week
before President intellect Donald Trump reenters the White House and
promises high tariff on China. Indeed, to colin US say
(03:33):
that the figures benefited from front loading of exports as
producers tried to ship goods ahead of and expected trade
war with the incoming Trump administration. Nomura Economists, for example,
in a research note yesterday, express quote, given the threatened tariffs,
we expect export growth to remain robust in the near
term because of front loading end quote. What's more, as
(03:54):
we discussed on Sunday, China is facing a record number
of trade tenngents with not just the US and the
EU markets, but also developing nations like India. Two twenty
eight trading partners launched investigations into Chinese imports last year,
up from eighteen and twenty twenty three. Notably, the list
included more developing countries such as Thailand, Peru, and even Pakistan,
(04:15):
so China's trade surplus is as much an achilles heel
an area of vulnerability as it is a sign of strength.
And as for the third point, the trade surplus in
many ways is symbolic of China's structural crises, which have
crippled other parts of the economy. Surplus, after all, is
the difference between imports and exports. Imports remain chronically low,
(04:36):
not because China doesn't want things from the rest of
the world, but because its own domestic demand is also
chronically weak. We have explored this at length in previous videos. Exports,
in part remain very high because since the property sector
imploded in twenty twenty one, Beijing has redirected state subsidized
capital from housing into manufacturing. Manufacturing had already been subsidized
(04:58):
in the past as well, resulted in over capacity and
producers having to sell internationally to minimize losses. It is
now well established that many manufacturers cannot make money selling
only domestically. This is why China has seen over twenty
four consecutive months of producer price deflation and why corporate
profits are so poor. As Gary Ung's and your economists
(05:19):
at Netexas told us outlet CNBC in an interview yesterday, quote,
China's deflationary pressure in the manufacturing sector may continue to
fuel more geopolitical tensions en quote. While the New York
Times did compare China's manufacturing to the state of the
US economy after World War II, in the case of
the US in the nineteen forties and early fifties, the
(05:41):
manufacturing sector was booming because it had a world to
sell to. In China's case, it is highly subsidized, losing money,
and reliant on an international market that is turning against
it in order to move its inventory. Even this issue
of overcapacity has become very politically incorrect within Beijing, despite
Beijing in twenty twenty five three identifying overcapacity as a
(06:01):
serious issue in the economy, since it is now fueling
a global trade backlash, it is politically unacceptable to discuss
it in Beijing. With the release of these trade numbers yesterday,
the deputy Director of the General Administration of Customs expressed, quote,
Chinese overcapacity issue does not exist and is a purely
false proposition end quote. So while China's historical trade surplus
(06:24):
is a symbol of its strength in some ways, it
is also a sign of sickness within its wider economic
system and a deep source of vulnerability. Next up, we
move to a concerning development regarding tai I. But it's quickly.
If you're getting some value from today's episode of China Update,
I have a huge favor to ask. That is, just
to hit that like button. And if you have not
(06:44):
done so already and you think you would watch another
one of these episodes, subscribe it at the Bell notification
icon and you'll be on top of the most up
to date analysis as China Update is released. Patreon and
bimere coffee links are also in the description for those
who want to help keep China Update financially sustainable. Thank
you so much, Let's continue. In a deeply disquieting development.
France based military outlet Naval News and an exclusive report
(07:08):
has discovered that multiple barges designed for amphibious landings are
under construction at a shipyard in Guangzhoul, southern China, adding
that they do not seem to have an obvious civilian use.
It is worth quoting the article at length quote Naval
News has seen multiple sources confirming their construction and has
shared information with naval experts to validate our preliminary analysis,
(07:30):
the consensus is that these are most likely for amphibious landings.
Each barge has a very long road span which is
extended out from the front at over one hundred and
twenty meters three hundred and ninety three feet. This can
be used to reach a coastal road or hard surface
beyond the beach. At the aft end is an open
(07:51):
platform which allows other ships to dock and unload. Some
of the barges have jack up pillars which can be
lowered to provide a stable platform even in poor weather.
In operation, the barge would act as a peer to
allow the unloading of trucks and tanks from cargo ships.
The barges are reminiscent of the Mulberry harbours built for
(08:13):
the Allied invasion of Normandy during World War II. Like those,
these have been built extremely quickly and to novel designs.
In quote, I did not expect two references to World
War II in one episode of China Update. Doctor Emma Salisbury,
see Power research fellow at the Council on Geostrategy, told
(08:35):
Naval News that quote any invasion of Taiwan from the
mainland would require a large number of ships to transport
personnel and equipment across the street quickly, particularly land assets
like armored vehicles. In quote, these mobile peers appear practically
suited for an invasion, Doctor Salisbury added quote as preparation
for an invasion, or at least to give China the
option as leverage, I would expect to see a build
(08:58):
up of construction of ships that could occccomplish this transportation.
In quote, Former National Intelligence Officer for East Asia and
CIA analyst John Cliver, in a post on x observed
on the News yesterday, quotes, this revelation of new portable
bridge docks is a signal that the next eighteen to
twenty four months are likely to see some shocking new
(09:19):
PLA capabilities. The operational challenges for the PLA are daunting.
There are specific problems that need to be solved for
invasion or blockade to be viable. The bridge docks, if
produced insufficient numbers, could enable heavy over beach operations. The
new US administration is going to confront PLA developments that
will drive tensions and blur analytic debates over Chinese capabilities
(09:43):
and intentions. Buckle up. The traditional view is that there
is only a small number of beaches on the main
island of Taiwan which are suitable for an amphibious landing,
and these could be heavily defended. These new barges could
change that calculus, as Naval Music explains, quote, the extreme
reach of the barley bridges means that the PRC could
(10:05):
land as sites previously considered unsuitable. They could land across
rocky or soft beaches, delivering the tanks directly to firmer
ground or a coastal road. That allows China to pick
new landing sites and complicate attempts to organize defenses. Instead
of relying on Taiwanese ports, China can now sail its
(10:26):
own mobile port across the Straits end quote. Taiwanese observers
said the PLA's new capability reinforce the need for Taipai
to target Chinese forces before they have reached the shore.
Lending you. An assistant professor at the Graduate Institute for
International Affairs and Strategic Studies at Taiwan's tom Kung University
expressed with the News yesterday quote, it is their large
(10:49):
amphibious assault ships, their helicopters and airborne forces that we
must be able to target it is like in baseball.
They may have chosen a very good closer, but if
we fight well in the first wave, that skill will
not come to bear. Okay, that is to day's episode
of China Update. Thank you so much everybody for watching.
(11:12):
Have a good Tuesday, and I will see you all
to morrow.
Happy Tuesday, everybody. Welcome to another episode of China Update,
where I provide you with the most up to date political, economic,
and geostrategic analysis on the world's number two economy. My
name is Tony. Let's jump in and we begin as
we usually do, with the economy. Yesterday Monday saw the
release of China's trade data. Now, unlike other official numbers
(00:20):
published by Beijing, these are typically very accurate as they
can be verified with trading partners. On the face of it,
the numbers look excellent, great news for China, taking some
pressure of policymakers. However, as we will see, the devil
is very much in the details and the situation is
not as good as it looks. China's trade data in
(00:41):
December bed expectations by a large margin, with exporters continuing
to frontload shipments as concern over additional tariff's mount Exports
in December jump to ten point seven percent in US
dollar terms from a year earlier, beating expectations of a
seven point three percent growth in a UK based Reuter's
poll up economists. It compares with six point seven percent
growth in November and a spike of twelve point seven
(01:02):
percent in October. In December, shipments to most markets climbed
with double digit increases to the Association of Southeast Asian
Nations and the US, where exports grew eighteen point nine
percent and fifteen point six percent, respectively from a year earlier. Interestingly,
Vietnam overtook Japan as China's third largest export destination for
the first time. China's exports to Vietnam in twenty twenty
(01:23):
four rose almost eighteen percent to a record one hundred
and sixty two billion US dollars that surpasses the one
hundred and fifty two billion in shipments to Japan, previously
the third largest market for Chinese exports. The reason for
the shift is likely that many Chinese manufacturers are moving
their operations to Vietnam in the hope that they can
avoid future terraces from the US and others against China.
(01:44):
Now that is on the export side, the import side
is a far less rosy picture. Customs data also showed
imports roads just one percent last month from a year earlier,
reversing from the contraction in the previous two months. That
compares with a bigger drop of three point nine percent
in November and two point three percent in October. With
these data, China's trade surplus with the rest of the
(02:07):
world reached a record of almost one trillion US dollars
in twenty twenty four, specifically nine hundred and ninety two
billion US dollars. Now, this is pretty incredible, as the
US based New York Times rights quote, when adjusted for inflation,
China's trade surplus last year far exceeded any in the
world in the past century, even those of export powerhouses
(02:29):
like Germany, Japan, or the United States. Chinese factories are
dominating global manufacturing on a scale not experienced by any
country since the United States after World War II end quote. Now,
some commentators will point to this performance and say, look,
China is seeing one trillion in trade surplus, how can
you say the Chinese economy is in a bad state.
(02:51):
To this observation, there are three points to be made. One,
most analysts acknowledge that China's trade numbers represent a rare
bright spot for the ACA economy, with the rest of
the economy experiencing varying degrees of poor performance. Two, Having
all your proverbial eggs in one growth basket is risky
at the best of times, but is especially dangerous for China.
(03:13):
In this environment, China's sole growth engine of significance is
currently exports. Of China's nine hundred ninety two billion US
dollars of trade surplus, more than a third was with
the United States. And this news comes just one week
before President intellect Donald Trump reenters the White House and
promises high tariff on China. Indeed, to colin US say
(03:33):
that the figures benefited from front loading of exports as
producers tried to ship goods ahead of and expected trade
war with the incoming Trump administration. Nomura Economists, for example,
in a research note yesterday, express quote, given the threatened tariffs,
we expect export growth to remain robust in the near
term because of front loading end quote. What's more, as
(03:54):
we discussed on Sunday, China is facing a record number
of trade tenngents with not just the US and the
EU markets, but also developing nations like India. Two twenty
eight trading partners launched investigations into Chinese imports last year,
up from eighteen and twenty twenty three. Notably, the list
included more developing countries such as Thailand, Peru, and even Pakistan,
(04:15):
so China's trade surplus is as much an achilles heel
an area of vulnerability as it is a sign of strength.
And as for the third point, the trade surplus in
many ways is symbolic of China's structural crises, which have
crippled other parts of the economy. Surplus, after all, is
the difference between imports and exports. Imports remain chronically low,
(04:36):
not because China doesn't want things from the rest of
the world, but because its own domestic demand is also
chronically weak. We have explored this at length in previous videos. Exports,
in part remain very high because since the property sector
imploded in twenty twenty one, Beijing has redirected state subsidized
capital from housing into manufacturing. Manufacturing had already been subsidized
(04:58):
in the past as well, resulted in over capacity and
producers having to sell internationally to minimize losses. It is
now well established that many manufacturers cannot make money selling
only domestically. This is why China has seen over twenty
four consecutive months of producer price deflation and why corporate
profits are so poor. As Gary Ung's and your economists
(05:19):
at Netexas told us outlet CNBC in an interview yesterday, quote,
China's deflationary pressure in the manufacturing sector may continue to
fuel more geopolitical tensions en quote. While the New York
Times did compare China's manufacturing to the state of the
US economy after World War II, in the case of
the US in the nineteen forties and early fifties, the
(05:41):
manufacturing sector was booming because it had a world to
sell to. In China's case, it is highly subsidized, losing money,
and reliant on an international market that is turning against
it in order to move its inventory. Even this issue
of overcapacity has become very politically incorrect within Beijing, despite
Beijing in twenty twenty five three identifying overcapacity as a
(06:01):
serious issue in the economy, since it is now fueling
a global trade backlash, it is politically unacceptable to discuss
it in Beijing. With the release of these trade numbers yesterday,
the deputy Director of the General Administration of Customs expressed, quote,
Chinese overcapacity issue does not exist and is a purely
false proposition end quote. So while China's historical trade surplus
(06:24):
is a symbol of its strength in some ways, it
is also a sign of sickness within its wider economic
system and a deep source of vulnerability. Next up, we
move to a concerning development regarding tai I. But it's quickly.
If you're getting some value from today's episode of China Update,
I have a huge favor to ask. That is, just
to hit that like button. And if you have not
(06:44):
done so already and you think you would watch another
one of these episodes, subscribe it at the Bell notification
icon and you'll be on top of the most up
to date analysis as China Update is released. Patreon and
bimere coffee links are also in the description for those
who want to help keep China Update financially sustainable. Thank
you so much, Let's continue. In a deeply disquieting development.
France based military outlet Naval News and an exclusive report
(07:08):
has discovered that multiple barges designed for amphibious landings are
under construction at a shipyard in Guangzhoul, southern China, adding
that they do not seem to have an obvious civilian use.
It is worth quoting the article at length quote Naval
News has seen multiple sources confirming their construction and has
shared information with naval experts to validate our preliminary analysis,
(07:30):
the consensus is that these are most likely for amphibious landings.
Each barge has a very long road span which is
extended out from the front at over one hundred and
twenty meters three hundred and ninety three feet. This can
be used to reach a coastal road or hard surface
beyond the beach. At the aft end is an open
(07:51):
platform which allows other ships to dock and unload. Some
of the barges have jack up pillars which can be
lowered to provide a stable platform even in poor weather.
In operation, the barge would act as a peer to
allow the unloading of trucks and tanks from cargo ships.
The barges are reminiscent of the Mulberry harbours built for
(08:13):
the Allied invasion of Normandy during World War II. Like those,
these have been built extremely quickly and to novel designs.
In quote, I did not expect two references to World
War II in one episode of China Update. Doctor Emma Salisbury,
see Power research fellow at the Council on Geostrategy, told
(08:35):
Naval News that quote any invasion of Taiwan from the
mainland would require a large number of ships to transport
personnel and equipment across the street quickly, particularly land assets
like armored vehicles. In quote, these mobile peers appear practically
suited for an invasion, Doctor Salisbury added quote as preparation
for an invasion, or at least to give China the
option as leverage, I would expect to see a build
(08:58):
up of construction of ships that could occccomplish this transportation.
In quote, Former National Intelligence Officer for East Asia and
CIA analyst John Cliver, in a post on x observed
on the News yesterday, quotes, this revelation of new portable
bridge docks is a signal that the next eighteen to
twenty four months are likely to see some shocking new
(09:19):
PLA capabilities. The operational challenges for the PLA are daunting.
There are specific problems that need to be solved for
invasion or blockade to be viable. The bridge docks, if
produced insufficient numbers, could enable heavy over beach operations. The
new US administration is going to confront PLA developments that
will drive tensions and blur analytic debates over Chinese capabilities
(09:43):
and intentions. Buckle up. The traditional view is that there
is only a small number of beaches on the main
island of Taiwan which are suitable for an amphibious landing,
and these could be heavily defended. These new barges could
change that calculus, as Naval Music explains, quote, the extreme
reach of the barley bridges means that the PRC could
(10:05):
land as sites previously considered unsuitable. They could land across
rocky or soft beaches, delivering the tanks directly to firmer
ground or a coastal road. That allows China to pick
new landing sites and complicate attempts to organize defenses. Instead
of relying on Taiwanese ports, China can now sail its
(10:26):
own mobile port across the Straits end quote. Taiwanese observers
said the PLA's new capability reinforce the need for Taipai
to target Chinese forces before they have reached the shore.
Lending you. An assistant professor at the Graduate Institute for
International Affairs and Strategic Studies at Taiwan's tom Kung University
expressed with the News yesterday quote, it is their large
(10:49):
amphibious assault ships, their helicopters and airborne forces that we
must be able to target it is like in baseball.
They may have chosen a very good closer, but if
we fight well in the first wave, that skill will
not come to bear. Okay, that is to day's episode
of China Update. Thank you so much everybody for watching.
(11:12):
Have a good Tuesday, and I will see you all
to morrow.
Popular Podcasts
New Heights with Jason & Travis Kelce
Football’s funniest family duo — Jason Kelce of the Philadelphia Eagles and Travis Kelce of the Kansas City Chiefs — team up to provide next-level access to life in the league as it unfolds. The two brothers and Super Bowl champions drop weekly insights about the weekly slate of games and share their INSIDE perspectives on trending NFL news and sports headlines. They also endlessly rag on each other as brothers do, chat the latest in pop culture and welcome some very popular and well-known friends to chat with them. Check out new episodes every Wednesday. Follow New Heights on the Wondery App, YouTube or wherever you get your podcasts. You can listen to new episodes early and ad-free, and get exclusive content on Wondery+. Join Wondery+ in the Wondery App, Apple Podcasts or Spotify. And join our new membership for a unique fan experience by going to the New Heights YouTube channel now!
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!