Fair is Foul for Chinese Exports

Oct. 16, 2013

After years of explosive growth, the Canton Fair in Guangzhou, China is smaller this year than in 2012. The giant fair for manufacturing exporters reflects a downturn in Chinese exports, reports Keith Bradsher in The New York Times.

“China announced on Saturday that its exports dropped 0.25 percent in September in dollar terms compared with a year ago, below economists’ expectations of 6 percent growth….” [The New York TImes]

Last week, HSBC reported that its Emerging Markets Index was 50.8, just above the neutral mark and indicating muted growth. China, with a composite index of 51.2, continued its weak expansion and showed some signs that exports could pick up.

“Chinese manufacturing output expanded for the second successive month in September, though the rate of growth slowed to a fractional pace. Total growth of new work remained weak, but new export business increased for the first time in six months with panelists citing stronger demand from Europe and the U.S.” [HSBC]

While economic conditions in emerging markets are showing marginal improvement, said Pablo Goldberg, global head of Emerging Markets Research for HSBC, the data remains disappointing overall.

“About half of the EM manufacturing PMIs are back above 50, with three quarters of the countries covered seeing improvements, compared to less than half a month ago." [HSBC]

Chinese manufacturers are feeling the effects of a strengthening currency, rising materials costs and continuing increases in labor costs, Bradsher reported in The New York Times. Ding Jiajun, the general manager at the Laizhou Toptool and Machinery Co., told him that steel prices had dropped this year.

“But wages in his area are climbing more than 20 percent a year as more young people go to college instead of factories, and prefer white-collar jobs when they graduate.” [The New York TImes]

Will it be long before China is holding a Manufacturing Day to try to lure young people into the industry?

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