Realist, not conformist analysis of the latest financial, business and political news

UK Car Exports To China Fall 72% – It’s Chinese New Year, Dummy

Seriously folks, we should be getting this right by now – no Chinese trade statistics for January or February of any year should ever be taken seriously. Which is exactly what Sky News hasn’t done with this latest screech that UK exports to China of cars fell 72% in January.


There’s this thing called Chinese New Year, you see?

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]UK car exports to China fall by 72% in January[/perfectpullquote]

No, really, sigh.

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] A total of 120,649 vehicles were produced in the UK during the month, down from the 147,507 made in the previous January, meaning that 26,858 fewer vehicles left British plants. Total exports for the month fell 21.4% to to 93,781 vehicles. While just over a quarter of the vehicles destined for China made the trip, exports to the European Union – the biggest market for British-made cars according to the SMMT – were down by 20%. Up to 80% of all British-made vehicles are exported and more than half of car exports go to the EU – 54% according the industry body, The Chinese market represents 7.5% of all output shipped overseas. [/perfectpullquote]

China basically closes down for Chinese New Year. In much the way that the European economy does for Christmas and New Year. However, Chinese New Year is not on the same date each year. Thus we cannot – and do not – use the usual seasonal adjustments to deal with it.

Think for a moment. We all know that Amazon and the varied Post Offices etc take on hundreds of thousands of temporary workers in December each year. We also know they all get fired come Jan 1. So, this happens every year. We don’t include these numbers in our employment statistics. Because we’re not interested in the fact that people send cards to each other for Crimble, we’re interested in the longer term trends across the employment market.

OK. This process then fails when we’ve something similar which isn’t happening at the same time each year. In 2018 Chinee New Year was on Feb 16. This on Feb 5. The effects of the two week closedown have thus been – largely if not entirely – shifted back from February into January.

That is, comparing Jan 2018 numbers to Jan 2019 such is going to be entirely and wholly misleading.

The correct stance to take here is simply not to believe any economic number at all coming out of or about China in January or February of any year. For, sure as eggs is eggs, give it a few weeks and we’ll find that UK car exports to China in February 2019 were very much higher than they were in February 2018. We’ve simply got a seasonal cycle that we’re not adjusting the statistics for, that’s all.

And stop screeching about it Fer The Lord’s Sake.

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