As Goes The Trade Surplus, So Goes The Renminbi

If China does not have a steady stream of incoming U.S. dollars, it cannot engage in credit creation and money printing unless it is willing to devalue the renminbi. Based on current trends and recent comments by Chinese leaders, in which they say China must accept slower growth in order to reform, China is probably going to opt for deflation (or disinflation) and slower GDP growth.

China's September export growth in surprise slide
China's exports dropped 0.3 percent in September from a year earlier, the Customs Administration said on Saturday, sharply confounding market expectations for a rise of 6 percent, and marking the worst performance in three months.
Imports fared better, rising 7.4 percent in September from a year ago, better than forecasts for a 7 percent increase, shrinking China's monthly trade surplus to $15.2 billion.

..."The strong renminbi has eroded China's export competitiveness," ANZ Bank said in a note. It said there were risks that China's economic growth may miss market forecasts this year, but predicted 2013 growth would hit 7.6 percent.

Gold may see another smash on Monday due to this news.

Here is background for why I believe a slowdown is coming:

September 4: Xi Says China Chose Slowdown to Allow Economic Adjustment
October 7: China's Xi says economy on a smooth, controlled slowdown

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