For the first half of the Great “Recession”, China and the rest of the EM world seemed immune. It was American subprime mortgages that we were told was causing all the problems, and if European banks had somehow gotten themselves entangled in the rotten real estate mess so much the better for where growth was invulnerable.

This first instance of decoupling was just that strange, for these sorts of rationalizations about economic firewalls never stand the slightest scrutiny.

Chinese export growth had moderated in the second half of 2007. Exports were expanding by about 27% in Q2 2007, the last one before August 9. By Q4, outbound trade was growing at just 22%. As late as Q3 2008, Chinese exports were still around that lower level (23%).

Ignore the slowdown, they said. Michael Pettis in August 2008 was among many downplaying the difference:

…the woes of a small but powerful segment of the export industry – low-value-added processors in the south of China, who have been hit primarily by rising wages and a welcome shift in the southern economies towards higher-value-added goods and services – have created a false impression about dire conditions for China’s exporters.

The Council on Foreign Relation’s (globalists proselytizers) Brad Setser the same month:

The sharp fall in German export orders and anecdotal evidence that American manufacturers are seeing a fall in European demand do suggest a broader slump in trade is in the cards, and it is hard to believe that China won’t be touched. If Danske Bank is right, real exports already have slowed significantly, with about 10% of the nominal export growth now coming from higher prices. But 15% real export growth is still quite strong. The US would be thrilled with that kind of growth.

But when I look back, I really don’t see strong evidence that China’s export boom has slowed in any meaningful way.

In Q4 2008, the next one, Chinese exports were basically flat, up just 4.3%. In Q1 2009, minus 19.7%.

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