Cookware seller Qu Yanpeng does not have to open a newspaper or turn on the TV to understand the impact of the global financial crisis. She could tell from the lack of visitors to her booth at a recent trade fair.
Qu, a sales manager for well-known Chinese cookware brand Supor, said that she had less than 20 clients on the first day of the ongoing Canton Fair, as opposed to about 100 on previous occasions.
She was echoed by Cloyce D. Palmer, a buyer of agricultural equipment from the United States. Palmer said businesspeople from his own country were conspicuous by their absence from China's largest trade fair. In addition, he had no plans to buy anything this year, since US distributors cancelled their orders before his trip.
This reflects how China's manufacturing sector is feeling the impact of the financial crisis as demand from developed economies shrinks. Although exports remain robust, the growth rate has declined, and fears mount that the crisis may spread to non-financial sectors.
According to statistics released by the National Statistics Bureau, China's foreign trade reached US$1.97 trillion for the first three quarters, up 25.2 percent year-on-year. However, the 22.3 percent year-on-year export growth is 2.8 percentage points lower than last year.
Wang Zixian, a researcher with the Ministry of Commerce, estimated that actual export growth for the first three quarters has actually declined to single digits if other factors such as export price increases and exchange rates are taken into account.
"This is a big risk for a country like China that is heavily dependent on exports," Wang said in a recent interview. "The fundamentals of the macro economy will get hit if there is an impact on exports."
The authorities have adjusted policies in order to maintain the stability of export growth. On Sunday, export tax rebates increased for more than 3,000 products, including textile and garments, the worst hit, and high value-added electrical and mechanical products.
Another option for worried entrepreneurs is to turn to the domestic market, which remains robust.
Retail sales rose 22 percent to 7.79 trillion yuan in the first nine months, up 6.1 percentage points year-on-year.
Therefore, life is easier for firms with a large domestic market. Qu from Supor said that although the firm's exports have been affected, its overall business will not suffer much since its major market is within China. According to the company, its domestic sales soared 36 percent in the first half of this year, while exports rose 15.9 percent.
(China Daily November 4, 2008)