CHIRONY

With media focusing primarily on China surpassing Germany as the world’s largest exporter, the real news in recent trade data is China’s soaring appetite for imports, which saw 59% growth in 2009. Expanding consumer demand and government-driven investment programs have revitalized international commodity markets and given some credence to the idea that China could drive the world out the global recession in 2010.

And here is where it gets interesting. China’s trade surplus last year plummeted 34% to US$196 billion, less than 9% of the country’s total trade value of US$2.2 trillion. In addition, Merrill Lynch predicts that the trade surplus will fall another 19% in 2010, to US$160 billion, on surging domestic demand and a 16% rise in imports.

Wait – I’m confused. Does this mean that the undervalued Yuan is suddenly a good thing? And will US politicians still complain about China’s currency practices if China runs an account deficit in 2011?

Let he who is without debt cast the first stone…