Daily Brief - Good exports from China show the way forward (Oct 13, 2021)

Even as the Hong Kong bourse closed due to a typhoon emergency, news from China carried positive tidings.

China’s exports in September were up 28.1% compared to the same month one year ago.,

As the global economic recovery picks up steam, demand for Chinese goods rises with the country’s customs administration showing that China had a trade surplus of $66.8bn for the month - 50% better than expected!

All of this to say, demand is there and it’s healthy. The issue is with supply - supply chains, to be precise. And in the competition for supply chain pressures, Europe is leading the way:

And therein lies the silver lining. As pent-up demand kicks the economy into gear, supply will adjust and ease growth and price pressures.

But how long does that take? This is mostly a labour-driven shortage - we have lorries and tankers, we just need to drive and pilot them. Research is inconclusive but we can point to past crises showing employment takes 12 months to reach pre-crisis levels.

So keep an eye on employment metrics, and prepare for a rocky year.