China's Trade Surplus Vanishing

choi

Eduardo Porter, China’s Trade Imbalance Is Vanishing. New York Times, May 2, 2012.
http://www.nytimes.com/2012/05/0 ... rade-imbalance.html

Quote:

"Something unexpected has happened to China’s economy, however. Its [China's] surplus with the rest of the world has largely disappeared.

"China’s own reaction to the global contraction [since financial crisis of 2008]— a huge buildup of roads, rail and other public infrastructure alongside a wave of cheap lending for private investment in construction and other projects — sucked in imports rapidly.

"And China’s terms of trade will get worse as the price of energy and the other raw materials it imports keeps rising even as the electronic devices and other machines it exports keep getting cheaper.

"This path [China's economy has taken] leads nowhere good. Further investment booms may continue to shrink China’s trade surplus. But they come at a high cost: more resources wasted on empty buildings and unused roads.

My comment:
(a) The conclusion, that China's trade surplus is shrinking rapidly, is not new, but the analysis, quoted above, is.
(b) There is no need to read the rest of the article, which is not as novel.