China trade surplus

The disruption caused by the conflict in Iran has not fully permeate into the global economy yet. It’s an oil shock in first order, but the second and third orders affect agriculture, transportation, and Trade, to name a few. Take a look at the chart below. China has just published a massive trade surplus of $1.18Tn over the last 12 months ending in March 30th. Despite tariffs and conflicts, China continues to build and export an incredible amount of goods to the world. They need oil too to build those goods, and they have reserves to cope with the disruption, temporarily. The difference with the rest of the world, is that they have also built an incredible solar, wind and nuclear infraestructure to be less dependent on oil than the rest of the world. China is probably the only country in the world that can adapt to a sock like the current one. They will suffer, but they have the ability and the capacity to overcome it. For the rest fo the world is not clear. Several countries are lining up to the U.S. treasury asking for dollar swap lines, and some of them will not get them. They will go to China for a Yuan swap line. And those moneys will abandon the petrodollar system, likely, forever. The world continued to change and it’s going east.

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