Could a Chinese Economic Downturn Be Looming?

July 13, 2016 11:00 AM

American exports to China have been doing well recently, according to analyst Andy Shissler of S&W Trading.

“The demand has been very good on everything,” Shissler told AgDay's Clinton Griffiths on Tuesday. “I don’t think it’s surprising at all.”

Will it stay that way for the long term? It’s possible, but Shissler continues to watch for signs of an economic downturn in China. “Economically things are slowing down [in China],” he said. 

For example, China's "Iron Orb" numbers look weak, which is an indication of slowing activity in construction and manufacturing.

“I think trouble that’s going on in Europe will start to affect their exports again as people start tightening up,” Shissler said.  “I think we’re at the beginning of another downturn, and it depends on Europe.”

While he doesn’t think the downturn will be too steep, Shissler acknowledged that any economic trouble in China tends to frighten people. “I think you’ll start to hear talk in the next four to six weeks about things slowing down there,” he said. “People tend to get worried, but I don’t think it’s dramatic.”

What might be the indicators worth watching? Currencies, thanks to the fallout from Britain's decision to leave the European Union. “Watch (China's) currency," Shissler said. "If they continue to lower it, you know they are hitting a rough patch.”


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