It's a been year of Trump protectionist bark - but little protectionist bite
 Signs of authoritarianism continue to appear, deflating China's once growing laissez-faire spirit, but the standing terror of western global protectionism has failed to materialise record Asian exports are anything to go by.
US President Donald Trump's fierce protectionist rhetoric and similar grumblings from the European Union have not slowed what has been an enormous recovery of world trade on mainline routes.
On the export side, China's top 20 container ports have gained momentum in growth with mid-2017 monthly volumes increasing 8.7 per cent, building to a 7.5 per cent jump throughout most of the year.
Much growth was due to US imports which rose 7.6 per cent year on year to 1.8 million TEU by July and never looked back since.
This acceleration has been matched by Chinese GDP growth which rode 6.9 per cent and well as a smaller, but still respectable, American economic growth of 3.6 per cent mid-year.
China's top 10 container ports, which include Shanghai and Ningbo-Zhoushan in the Yangtze Delta, Shenzhen and Guangzhou in the Pearl and Qingdao and Dalian in the Bohai Rim, together handled a combined 15.6 million TEU, up 7.4 per cent on the 14.47 million TEU handled in July of 2016. Throughput at Shanghai, the world's busiest box port, also grew strongly in July, rising 5.2 per cent year on year.
At Europe's biggest box port, Rotterdam, volumes have been up 9.3 per cent year on year, making it the top EU importer of Chinese goods.
True, the EU's No 3 port, Hamburg, suffered from the West's continuing contretemps with Russia, but its big terminal operator, Hamburger Hafen und Logistik (HHLA), which handles two thirds of the box in the port, enjoyed a 12 per cent jump in throughput nonetheless.
What put Rotterdam so far ahead was the decision of the three shipping alliances - 2M, THE Alliance and Ocean Alliance transshipments on the Dutch port.
No 2 EU port, Antwerp, has now slipped behind Rotterdam, and also has widened its lead over Hamburg, which it ousted as Europe's second-largest container hub a few years ago.
It was much the same story with American imports at US major container ports. "Docks have been busier than ever and that's a good sign both for the nation's economy," said National Retail Federation (NRF) vice president Jonathan Gold, whose member companies buy and sell the bulk of Chinese goods in America.
Mid-year, US monthly cargo tallies were 1.78 million TEU in July - up five per cent from the previous month and 9.2 per cent more year on year, the highest since 2000, beating the previous record of 1.73 million TEU in March 2015.
While Hurricane Harvey slowed Gulf Coast cargo and Hurricane Irma has damaged Florida port trade prospects, neither significantly impacted national totals.
"The United States economy has experienced a long, sustained period of growth beyond any seen in the last few decades," said Hackett Associates founder Ben Hackett, who conducts the monthly Port Tracker survey.
Sharing the good news, CMA CGM chief executive Rodolphe Saade says global container shipping is in its strongest position in years thanks to sweeping consolidation and stronger economic growth.
He said container lines have emerged from a severe downturn that culminated in last year's collapse of South Korea's Hanjin Shipping. "Last year was a bad year, 2017 is a good year and 2018 should be a pretty steady one," Mr Saade told Reuters. "With the consolidation in the sector, the development of alliances and the favourable market conditions, I can't see a crisis coming."
A series of major acquisitions, including CMA CGM's US$2.4 billion takeover of Singapore-based APL and market leader Maersk Line's US$4 billion deal to acquire Hamburg Sud, have curbed overcapacity, he said, omitting mention of Cosco' takeover of Hong Kong's Orient Overseas Container Line.
Mr Saade rejected criticisms that new orders for mega ships risked recreating a new supply glut, saying the vessels were tailored for busy Asia-north Europe routes where scale was crucial and its partners in the vessel-sharing Ocean Alliance already used extra-large ships. Vessel-sharing alliances, he said, also helped to cut slack, though he suspected that consolidation in the sector had run its course for now.
All this good news is also backed by soaring Chinese industrial profits which have increased 24 cent over most of the year, Bloomberg reported. The August increase was the biggest in four years, according to China's national statistics bureau.
"This reflects a positive outcome of supply-side reforms that aim to take out overcapacity," said Iris Pang, an economist at ING Groep NV in Hong Kong. "Meanwhile, costs are declining as prices of some materials head down."
Given the good news, Standard & Poor's Global Ratings downgrade of the country's sovereign debt came has something of a surprise back in September.
After cutting the credit ratings on China by one notch to A+ on concern of rising economic and financial risks after years of credit-fueled growth, S&P moved to lower its ratings on Chinese lenders. While the follow-on downgrades were in line with the industry practice, the cut will effectively increase the lending costs for those lenders, Caixin reported.
But Chinese lenders quickly rallied, with the China Banking Association calling S&P’s decision unfair, saying the ratings agency "can't see the forest for the trees."
While the American president's bark now appears to be far worse than his bite, there is also evidence that he is not toothless either. Such comes in the form of US Commerce Secretary Wilbur Ross's sustained and persistent quest to level a "lopsided" playing field for US companies, reports the Wall Street Journal.
Mr Ross was in Beijing to pave the way for a meeting between President Xi Jinping and President Trump while at the same time the secretary leads a trade delegation to China. While neither side has yet to implement concessions it is expected that if China is to win its "quid" it must offer a "pro quo", so to speak.
The US demands that China lower protectionist barriers and improve protection of intellectual property, especially now as China expects to be a major technology player.
There have been signs - but only signs - that China is bending to western will on something closer to a free-floating currency after economists - including officials from the central bank - suggested the time had come for such a move.
This came in a report from the China Finance 40 Forum, whose members include Huang Yiping, a member of the People's Bank of China's monetary policy committee, the South China Morning Post reported. "If policymakers have the willingness and resolution [to reform the yuan], I think they can do it now," Mr Huang said. "Now the timing is good." he said, adding that the government had a window of opportunity to set the yuan's exchange rate free.
What chills the otherwise cheerful prospect of China's full participation in what amounts to a full global economic recovery is news that Cyberspace Administration of China is handing out maximum penalties to top tech firms, including Tencent, Baidu and Weibo, for failing to censor "fake news" and pornography as well as content that "incites ethic tension" and "threatens social order."
According to Reuters, it is the first time that the CAC has levied the maximum fines against tech firms under a new laws as it seeks to tighten its grip on the Internet. One can only hope that such moves are limited, targeted and temporary and not be carved in stone as standard operating procedures to sink what was a rising spirit of a freer an ever-creative China. |
