Shanghai container terminal at dusk.
UK exports to China collapse by 40%
UK exports to China appear to have peaked in 2014Q3 at £4.2bn; in 2015Q3 the figure was £2.5bn, a fall of 40%. The chart shows quarterly figures.
UK exports to China, £ million
The implications for the condition of the Chinese economy are plain. While monthly figures are more volatile, there is no respite, with monthly declines of 19% into July, 18% into August and 9% into September.
But there is more to the export figures than the China story.
Over recent quarters, as prices have fallen sharply, movements in trade have become more and more difficult to interpret. The two charts below compare values, volumes and prices for each of EU and non-EU economies (on the same scale, set at 2009 Q1 = 100).
UK exports, 2009 Q1 =100
In the medium term, the difference in outcomes on both volumes and values since the implosion of the eurozone is plain to see. Over recent quarters eurozone volumes have recovered a little, but only following price falls. It is unclear to me whether this amounts to any material gain to UK business and the UK economy. On non-EU countries trade has obviously been stronger throughout, though hardly stellar since around 2012; after a surge over 2014, there has been a very steep fall into the latest quarter. This is partly, but not exclusively, related to China. The table below gives a country breakdown of these movements in non-EU trade over the brief surge (2014Q3-2015Q2) and then the fall.
Change in exports, £ bn
|Total||China||Switzerland||US||other shown by ONS *||other|
|change 15q2 to 15q3||-4.8||-1.2||-0.3||-1.2||-0.3||-1.8|
*Canada, Hong Kong, Japan, Norway and South Korea
Note that China is accounts for a quarter of the decline in exports into the latest quarter; likewise the US (though following an erratically strong 15Q2; Switzerland had an erratically strong 15Q1). So a large part of the decline is to other non-EU countries not identified by the ONS, these include Brazil and Russia, known to be in recession, but not colossal trading partners for the UK. Given the fall in EU trade (and the country breakdown), the suggestion is that trade is declining with much of the world.
A caveat. These trade figures have been very erratic of late. It can be seen on the chart that price movements in the latest quarters are a little odd, and in addition do wholly line up with movements in volume series.
But taking the broad picture at face value, the Bank of England’s caution yesterday about the global outlook is seen as very understandable. (Whatever your views about their bullish assessment of the domestic economy.)