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Posted by: Michael Mandel on December 08
I was just reading a report by Capital Economics on a decline in Chinese exports. They wrote
….strains have been growing in the system of trade finance that underpins global trade. Industry sources report that 70% of China’s exports last year were financed by letter of credit which, anecdotal reports now suggest, banks are now less willing to issue or accept.
I wonder. When you buy stuff from the other side of the world, somebody has to finance the goods in transit. Could it be that cheap credit made it easier to outsource production to China?
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.