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China's export industries challenged amid U.S. credit crisis
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21:48, April 16, 2008

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Exhibiting at China's largest trade fair may not be a painkiller for tens of thousands of Chinese exporters who have felt a pinch under the spell of the U.S. credit crisis.

It is too early to see how many orders would be signed during the ongoing biannual Canton fair held in Guangzhou, capital of south China's Guangdong Province, but gloomy prospects have prevailed among domestic manufacturers and traders who have witnessed a slower increase, or even a drop, in their orders.

"The growth of export orders in the first quarter of this year fell sharply to 20 percent from 140 percent in the same period of last year," said Cao Xiaojian, vice chairman of the Jiangsu Shuntian Co., Ltd. at the fair.

Meanwhile, the accelerating rise of the yuan makes things worse. Cao said that a 1 percent rise in the yuan would result in a sales profit decrease of 2 percent to 6 percent. He admitted a quarter of managers in the factories under the largest Chinese textile enterprise have been sacked.

The impact of the lower external demand on small and middle enterprises is catastrophic. "A U.S. client used to order five million meters of jean fabric a year, but this year's order reduced to only one million meters," said Zhang Meng, a businessman from Lanyan Group, a major domestic jeans material producer based in Zibo of east China's Shandong Province. In Zhoucun District in the same city, only 70 out of the total 100 clothing factories opened after the Spring Festival this year, said Zhang.

"Export increase of machinery and electronic products to the U.S. slowed to 18.9 percent in 2007, down from 26.4 percent in 2006," said Zhang Yujing, vice chairman of the China Chamber of Commerce for Import & Export of Machinery & Electronic Products. He predicted the growth would likely to further slow this year.


From January to March, China's total exports rose 21 percent to 206 billion U.S. dollars, 6.4 percentage points lower than a year earlier. The exports to the U.S. grew 5.4 percent to 53 billion yuan, 15 percentage points lower than the same period of last year, according to customs statistics.

In the trade hub of Guangdong, the growth of exports to the United States dwindled to 4.8 percent in the first quarter of this year from 15.5 percent in the same period of 2007, said Wu Gongquan, vice director-general with the department of foreign trade and economic cooperation of the province.

"Given the sluggish U.S. market, this year will be tough for export sectors," Wu said.

"Chinese goods are popular among the U.S. consumers, yet we still have to reduce purchase because of the decreasing U.S. demand," Ben Noonan, sourcing manager of the Smartful Home, a U.S. textile importer, told Xinhua.

"Not only the U.S. market, but a global slowdown under the impact of the global credit crisis would affect China's exports industries," said Zhang Yansheng, director of the International Economic Research Institute under the National Development and Reform Commission.

Experts believe deceleration in exports will help reduce the trade surplus, which shrank 10.8 percent year-on-year to 41.42 billion U.S. dollars in the first quarter, according to customs figures.

Minister of Commerce Chen Deming said on Tuesday that export growth remained in a reasonable zone, while the impact of the global credit crisis would be closely monitored.

He said that gains in exports to the United States had slackened while those to the European Union, Japan and new markets were on the rise.

"The U.S. and European markets are not the only choice for Chinese enterprises. The profitability would be pretty high in African markets like South Africa and Egypt," said Cao Xinyu, vice chairman of the China chamber of commerce for textile import and export.

Largely due to the global economic slowdown, economists around the world have geared down forecast of China's economic growth.

Early in April, the World Bank cut its 2008 forecast for China by 0.2 percentage points to 9.4 percent -- its second reduction in as many months. The Asian Development Bank also lowered its 2008 forecast for China's economic growth to 10 percent from 10.8 percent.

The Chinese Export Commodity Fair, a biannual event launched in 1957, consists of two phases: textiles and garments, home electric appliances and machineries in the first phase that is scheduled from April 15 to 20; and souvenirs, gifts and food stuffs in the second, from April 25 to 30. About 18,660 enterprises from home and abroad are attending.

Source:Xinhua




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