Visit the port of Hong Kong for the first time this summer, and you won’t know that anything is amiss. It’s a hive of activity, full of ships loading up on containers stuffed with Chinese goods for export around the world.

But a regular visitor might notice a difference. Nothing too dramatic – but compared to a year ago, there seem to be fewer ships and fewer containers. Those giant cranes are a bit less busy than before.

It’s not just Hong Kong. There’s a slowdown underway at most of China’s ports, which include six of the world’s ten busiest. Container volumes are still growing, but at around half the pace of last year. And the rate of growth is declining each month. It’s clear that demand for Chinese exports is taking a hit as the global economy slows.

This situation is likely to get worse, as we’ll see below. But despite what many are saying, this is not a crisis for China. An economic hard landing is not on the cards. Let’s see why …

The main reason for the export slowdown is, as you may have guessed, the impact of the credit crunch in the US. US consumers and businesses simply don’t want – or can’t afford – to buy as many Chinese goods as they have for the last few years.

You can see this in falling imports into US docks, such as Los Angeles, where volumes are off almost 14% year-on-year. You can see it in the narrowing US trade deficit. And you can see it in the results of China Shipping Container Lines (CSCL), the world’s sixth-largest container shipper, where revenue growth on trans-pacific routes has been weak compared to routes in the rest of the world.

It’s drawing more attention now, but this trend has in fact, been obvious since last year. Yet Chinese export growth has not collapsed, despite lower US demand. That’s because other markets such as Europe and oil-cash rich Russia and the Middle East have picked up the slack. This seeming indifference to America’s weakness has led many to conclude that “decoupling” – the idea that the rest of the world could fully shrug off a US slowdown – was a reality.

Sadly it’s not. All we’ve been seeing is a delay as the fallout from the US makes its way through the global economy. And now another one of China’s key export markets is undergoing a sharp slowdown.

The Eurozone will be the next market to falter

The latest GDP figures from the Eurozone confirm what should have been apparent all along – this slow-growing region with plenty of imbalances of its own is not much more resilient than the US. With GDP falling 0.2% in the second quarter and only sluggish growth ahead, there’s no way that China’s exports to Europe are going to stay as robust as they have for the past year.

Indeed, largely unnoticed by most commentators, there are already signs that European demand is fading. Container volumes on the Asia-Europe route are still up year-on-year, but the rate of growth is sliding fast. Shipping news service Lloyd’s List reports that some shippers have cut their charges in half to try to hold on to business as demand from exporters needing to get their goods to Europe falls.

As the eurozone goes into recession, this will only get worse. And currency effects aren’t going to help. As we mentioned last week, the renminbi’s three-year-long rise against the dollar has stalled, as Beijing tries to keep Chinese firms competitive in the slowing US market.

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Source: The Chinese Companies that can withstand a US Recession