China Reports 2.2% Decline in November Exports

This is the first decrease in seven years and followed a 19% increase in October. This report shows a very abrupt slowdown in exports. Imports also declined 17.9% which may mean factories imported less raw material because future orders are weak. It also is partially caused by consumer demand in China decreasing as consumers there tighten their belts in the shaky economy.

This is not good news at all, but not surprising either. There certainly is a correction/recession going on in which US consumers are cutting back their consumption and Chinese factories will have to cut production. I believe most Americans bought too much (too much house, too much car, too many toys, etc.) in the past which is one of the causes of this correction. If Americans settle on a consumption rate that boosts their savings rate, long-term this correction will have been helpful. Having the Chinese increase their consumption in a rational way that matches their GDP growth will also help.

In China now it appears the marginal and low-quality factories are closing. This can also be a silver-lining of the correction.

At some point the recession needs to turn the other way or the global economy will sink into something worse. Hopefully the actions of global governments will help along with a reduction in factory closings and layoff notices so the nervousness of consumers subsides.