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Sept.7, 2015

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4 THE JOURNAL OF COMMERCE Editor's Letter Chris Brooks CHINA IS BACK. No, not in the eco- nomic sense, where until the past year, it was the envy of the world for the better part of this century. But China is definitely back at the top of the international busi- ness news scene, sending perhaps the biggest shockwaves through the fi nancial, trade and transportation markets since the 2008 global fi nan- cial collapse. How Beijing's double dose of news in recent weeks — reportedly ordering a merger of state-owned Cosco and China Shipping that would create the world's fourth- largest container shipping operator, followed by a stock market-rattling devaluation of the Chinese currency — plays out not only could dictate the course of trade and how it moves for the foreseeable future. It also might be the springboard to much-needed and long-awaited container shipping consolidation that could bring sta- bility to oceanborne transportation providers sorely lacking it. But one side's stability is anoth- er's uncertaint y, which is why Bruce Carlton doesn't like the idea of a merger between the world's sixth- and seventh-largest carriers. "Customers like to have as many choices as possible, and taking a net player out goes against that direc- tion," the president of the National Industrial Transportation League, the United States' largest shipper organization, told Execu- tive Editor Mark Szakonyi. Left unspoken was the underly- ing effect reduced competition has in a market-based economy: higher pric- ing, something ocean carriers haven't been able to sustain, or even seemingly grasp, excluding sporadic periods of particularly strong demand such as the post-recession year of 2010. Granted, a Cosco-China Shipping merger has been rumored for years, and there's no guarantee it will happen now. But the second China hammer to fall in August — the devaluation of the yuan — certainly underscores the seriousness with which Beijing views its economic performance, and bol- sters the credibility around the merger talk. While economists can argue about the devaluation's impact, the message sent of weakening economic growth and the massive debt cloud forming over its future is indisputable. From an economic standpoint, China — the world's star performer even through the 2008-09 Great Recession — is weaker than at any point in the decade-and-a-half since its admittance to the World Trade Organization opened the fl oodgates to the country's manufacturing power. More and more economists are scoffing at official figures of 7 percent GDP growth, and July's 8.3 percent decline in exports not only extended a downward spiral but also far exceeded economists' expec- tations for a 1 percent decline. Taken as a whole, this is uncharted territory, at least over the last 15 years, for a country accustomed to unpar- alleled economic growth and the freedom (!) granted by its state-run, quasi-market-based government to call the shots on virtually anything required. (Need a new port? Build at Yangshan. No environmental review required. It requires a 20-mile bridge to connect to the mainland? Go for it.) But if we've learned anything since 2001, China is relentless in pur- suing solutions that are best for, well, China, and those solutions more times than not have benefited developed economies. If, as the conventional wisdom laid out in this week's cover package goes, China's devaluation aims to kick start the country's stut- tering export economy, global supply chain interests from retail importers to service providers will benefi t. When the U.S. sneezes, the old adage goes, the rest of the world catches a cold. The same can be said about China today. But don't underes- timate China's recuperative powers, because they just might inject more rapid, sustainable growth to the econ- omies that touch it. In the long run, maybe a Chinese cold is just what the doctor ordered. JOC China Takes Its Medicine The Journal of Commerce (USPS 279 – 060), ISSN 1530-7557, September 7, 2015, Volume 16, Issue No. 18. The Journal of Commerce is published bi-weekly except the last week in December (printed 26 times per year) by JOC Group Inc. 2 Penn Plaza East, 12th Floor, Newark, N.J. 07105. Subscription price: $344 a year. Periodicals postage paid at Newark, N.J., and additional mailing offi ces. © All rights reserved. No portion of this publication may be copied or reprinted without written permission from the publisher. POSTMASTER: Please send address changes to The Journal of Commerce, Subscription Services Department, 2 Penn Plaza East, Floor 12, Newark, N.J. 07105-2257. SEPTEMBER 7.2015 EXECUTIVE EDITOR, THE JOURNAL OF COMMERCE AND JOC EVENTS Chris Brooks 973.776.7818 MANAGING EDITOR Barbara Wyker 973.776.7817 EXECUTIVE EDITOR, JOC.COM Mark Szakonyi 202.872.1234 SENIOR EDITORS Joseph Bonney, Trans-Atlantic, East and Gulf Coast, Latin America 973.776.7809 William B. Cassidy, Trucking and Domestic Transportation 202.872.1228 Bill Mongelluzzo, Trans-Pacifi c 562.428.5999 Greg Knowler, Asia +852 3975 2647 ASSOCIATE EDITOR Reynolds Hutchins, Intermodal Rail and Government/Regulation 202.572.1487 EDITOR-AT-LARGE Peter T. Leach 212.755.0940 RESEARCH EDITOR Marsha Salisbury 973.776.7828 ASSISTANT WEB EDITOR Dustin Braden 973.776.8652 ECONOMIST Mario O. 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