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English>>China Business

Woes leave legacy we can be thankful for

By Zhou Feng (China Daily)

13:40, October 29, 2012

If ever you wanted proof that blessings can come in the guise of misfortune, then surely this is it.

Since China joined the World Trade Organization in late 2001, its trade has grown at more than 20 percent a year. That boom helped China to replace Germany as the world's largest exporter in 2009, and in all likelihood to become the world's largest trader by the end of this year.

But Chinese exporters and manufacturers have suffered two bouts of serious economic slowdown over the past 12 years.

The first coincided with the global financial crisis in 2008 and 2009, the world's worst financial meltdown since the Great Depression of the 1930s. China's exports experienced their largest setback as international orders drained away.

The drop in Chinese overseas shipments was not only sudden, but also deep and prolonged.

Exports fell 2.2 percent year-on-year in November 2008, after having risen 19.2 percent the previous month. The declines continued for more than a year, and growth returned in December 2009.

The wounds are still raw: Factories in the country's two major manufacturing powerhouses, the Pearl River Delta and the Yangtze River Delta, pulled down their shutters; migrant workers packed up and returned to their farmlands, and wage cuts became the order of the day.

For many Chinese exporters and workers it would have been a new experience: losing confidence, albeit briefly, in the country's economy.

But one result of these hefty export losses was that businesses began to realize that just as there can be economic sunshine, there can also be economic rain.

It was after the financial crisis that Chinese exporters and manufacturers, small ones in particular, learned to save for those rainy days through measures such as reserving part of their liquidity even when they are short of capital, carefully choosing foreign orders and employing more short-term workers.

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