Trade tensions flare as recovery fades

Trade figures coming this week from three of the world's biggest exporters — Germany, China and the United States (U.S.) — are likely to show vast gains from a year earlier, when the global recession was at its peak.

But they may also reflect a downshift in the rate of recovery. In China, for example, economists polled by Reuters are looking for a sharp 23 percent jump in January's exports year-over-year, but a decline when compared with December.

The contrast is even more dramatic for China's January imports, which are forecast to jump by 86 percent from a year earlier but decline from December.

That pattern matches what is happening in the U.S., China's best customer. Fourth-quarter economic growth was considerably stronger than expected, but recent readings suggest January's growth will be slower.

“We're going to settle down, growth is going to slow,” said Nigel Gault, chief U.S. economist with IHS Global Insight, listing stubbornly high unemployment and weakness in domestic demand among the obstacles.

Most economists think it will be at least four years before U.S. unemployment gets anywhere close to its pre-recession level of 5 percent, which leaves the U.S.relying heavily on the rest of the world to help lift growth and create jobs.

U.S. President, Barack Obama, wants to double U.S. exports over the next five years. China also needs to maintain its export growth to create jobs and keep its economy humming.

That is a recipe for conflict, and the disputes have been piling up. The latest round came on Friday when China said it would levy anti-dumping duties on U.S. chicken products.

“Up until now we could be pleased that trade tensions have stayed as low as they have given how deep the recession was and how much unemployment was created,” Gault said. “Going forward, there will be more spats and at some point there's a potential for both sides to lose their patience.”

If the U.S. is to achieve its export goal, which economists see as a tall order, it will need strong global economic growth to boost demand. It will also need a weaker U.S. dollar — or stronger Chinese yuan — to make its goods more competitively priced.

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