“Trade finance is collapsing”

…said Victor K. Fung, the chairman of the Li & Fung Group, the giant supply chain management company that connects factories in China with retailers in the United States and Europe. “We’ve got orders we can’t ship right now.”

Source: “As Trade Slows, China Rethinks Its Growth Strategy,” NYT Jan 1, 2009.

The graph from the article shows the nature of the dropoff, even taking into account the volatility in the month-to-month figures:
This further supports the view that trade financing is a substantial constraint to trade. [1]

Originally published at Econbrowser and reproduced here with the author’s permission.