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No Signs of Recovery for China’s Exporters

October 5, 2009 is reporting signs that suggest a dismal outlook for a key sector of China’s economy:

The season for Christmas orders has passed, and Chinese exporters do not yet see the slightest trace of any rebound. The export market for Chinese goods next year shows no promise and is hovering near its lows.

To be sure, China is trying to stimulate domestic demand to compensate for the dramatic drop-off in exports.  But prior to this year, exports accounted for over 40% of China’s GDP.  Furthermore, the export sector is highly concentrated in a few coastal provinces that serve as China’s engine of growth, and employs millions of migrant workers from farther inland.

Poor business conditions are attributable mainly to continued declines in retail sales in the U.S. and Europe.  Hardest hit is the textile and apparel sector, which was down more than 15% year-on-year in August.  Reports indicate a shift in buying practices away from large whole-year orders to 2-3 month piecemeal purchases, leaving manufacturers uncertain about their future.  The upcoming Canton Trade Fair, later in October, will be closely watched by economists, but according to ChinaStakes, “analysts see no reason to believe the situation will improve.”

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