WEBVTT 00:00:00.340 --> 00:00:01.810 align:middle line:84% A big week for the Chinese economy 00:00:01.810 --> 00:00:04.720 align:middle line:84% began on a disappointing note, with monthly exports 00:00:04.720 --> 00:00:08.440 align:middle line:84% falling to their lowest level for two years in December. 00:00:08.440 --> 00:00:10.570 align:middle line:84% This raises two important questions. 00:00:10.570 --> 00:00:13.810 align:middle line:84% How much can falling exports be blamed on the trade war 00:00:13.810 --> 00:00:14.860 align:middle line:90% with the US? 00:00:14.860 --> 00:00:19.330 align:middle line:84% And how much are they down to a broader slowdown in China? 00:00:19.330 --> 00:00:21.850 align:middle line:84% As always, the picture is a bit messy. 00:00:21.850 --> 00:00:24.880 align:middle line:84% In an unintended consequence of the trade war, 00:00:24.880 --> 00:00:28.390 align:middle line:84% the January 1 deadline from Washington to increase tariffs 00:00:28.390 --> 00:00:31.780 align:middle line:84% encouraged American importers to front load purchases 00:00:31.780 --> 00:00:33.230 align:middle line:90% of Chinese goods. 00:00:33.230 --> 00:00:35.500 align:middle line:84% But in early December, China and the US 00:00:35.500 --> 00:00:37.390 align:middle line:90% agreed to a three-month truce. 00:00:37.390 --> 00:00:41.290 align:middle line:84% That led to a contraction in buying as US importers breathed 00:00:41.290 --> 00:00:42.650 align:middle line:90% a sigh of relief. 00:00:42.650 --> 00:00:44.860 align:middle line:84% But it is that slowdown in demand 00:00:44.860 --> 00:00:46.480 align:middle line:84% that appears to be behind December's 00:00:46.480 --> 00:00:48.580 align:middle line:90% sharp drop in exports. 00:00:48.580 --> 00:00:52.090 align:middle line:84% Overall, though, the total China-US trade surplus - 00:00:52.090 --> 00:00:54.610 align:middle line:84% Donald Trump's favourite measurement of the trade 00:00:54.610 --> 00:00:56.650 align:middle line:84% relationship between the two countries - 00:00:56.650 --> 00:00:59.980 align:middle line:84% is now at its highest since 2006. 00:00:59.980 --> 00:01:02.440 align:middle line:84% This is, in part, down to a fall in imports 00:01:02.440 --> 00:01:05.750 align:middle line:84% from the US to China, including the much discussed fall 00:01:05.750 --> 00:01:08.890 align:middle line:84% in Chinese sales of Apple's iPhone. 00:01:08.890 --> 00:01:11.260 align:middle line:84% But also included in the detail is 00:01:11.260 --> 00:01:15.700 align:middle line:84% a decline in iron ore imports, the first since 2010. 00:01:15.700 --> 00:01:17.080 align:middle line:84% And a signal that the real estate 00:01:17.080 --> 00:01:19.150 align:middle line:90% industry is starting to wobble. 00:01:19.150 --> 00:01:20.860 align:middle line:84% A big slowdown in construction could 00:01:20.860 --> 00:01:24.550 align:middle line:84% have even greater significance in the wider Chinese economy, 00:01:24.550 --> 00:01:27.850 align:middle line:84% as well as hurting Australia and the big miners for whom China 00:01:27.850 --> 00:01:30.280 align:middle line:84% is, by far, their biggest customer. 00:01:30.280 --> 00:01:33.400 align:middle line:84% If the slowdown in real estate starts to affect house prices, 00:01:33.400 --> 00:01:36.610 align:middle line:84% then China's economy might really be in trouble. 00:01:36.610 --> 00:01:38.170 align:middle line:84% That hasn't happened yet, but there 00:01:38.170 --> 00:01:40.300 align:middle line:84% are signs that consumers are starting 00:01:40.300 --> 00:01:43.390 align:middle line:84% to tighten their belts with sales of big ticket items, 00:01:43.390 --> 00:01:47.350 align:middle line:84% like cars, expected to slow in 2019. 00:01:47.350 --> 00:01:50.350 align:middle line:84% Global industries from automakers and mobile phones 00:01:50.350 --> 00:01:53.620 align:middle line:84% to luxury goods have relied on Chinese consumers for growth 00:01:53.620 --> 00:01:55.450 align:middle line:90% since the financial crisis. 00:01:55.450 --> 00:01:58.300 align:middle line:84% It now looks as if Chinese consumers won't 00:01:58.300 --> 00:02:02.550 align:middle line:84% be the big spenders they have been up to now.